By now, early in the Trump administration, it is clear that any and all policies are up for grabs. But even as issues like immigration and border security can be altered quickly with the stroke of a pen on an executive order, the changes coming to the Affordable Care Act (ACA) and other health care rules and regulations will take longer to unravel—measured in months and possibly years rather than weeks because Congress must act first.
What these reforms will mean to long term care (LTC), post-acute care (PAC), and assisted living is of course not known. If anyone can figure out how Congress will replace the ACA, and what if anything they decide will be to the liking of President Trump, is beyond a betting person’s capabilities. But one expert in analyzing the LTC-PAC universe says even with D.C.-based changes looming, the attention of providers, especially PACs, should not waver from two fundamentals that will survive: to get your clinical house in order and to get your costs down.
This is because the march toward value over volume and the trend for hospitals to tighten their PAC networks is only going to continue, no matter who resides at 1600 Pennsylvania Avenue, says Shawn Matheson, manager for Leavitt Partners. That doesn’t mean, he notes, that Congress and the administration won’t overhaul existing CMS bundled payment and related demonstration pilots. What it means, instead, is that hospitals and managed care payers will be narrowing networks even if policy goes in new directions.
“In the rapid shift to value-based payments, many hospitals and medical groups are shifting referral patterns and creating PAC value networks,” Matheson says. “I see two main ways of change that have brought about these shifts for hospital-to-PAC referral patterns. The first wave began since fiscal year 2013 when the Medicare hospital readmissions reduction program began and the second wave, a much bigger and much more sudden one, began in April 2016 with the advent of Medicare’s Comprehensive Care for Joint Replacement bundled payment program.”
These policies helped put hospitals on alert to partner with top PAC providers, those that demonstrate high-value outcomes, low-cost spend, and clinical specialization in order to reduce readmissions, he says.
“Bundled payments are creating winners and losers in the PAC space,” Matheson says. “Referrals are going to the high-value providers that can demonstrate value, and those actively willing to work on lowering their length of stay.” There is an inherent risk and reward for a PAC provider participating in bundles in that decreasing your costs has to be offset by the volume of referrals from the hospitals,” he says. “The key is to get hospitals to compensate with volume,”
This is happening even as skilled nursing care centers are being left out of some of this planning in favor of home- and community-based care in many cases. The pendulum, Matheson says, will likely swing back to using PAC providers as the first site of care. This is because more and more anecdotal evidence is emerging that too many patients are coming back to the hospital from the home- and community-based settings who should have gone to PAC care first.
With much of the ACA being eyed by Republicans for replacement, there is still an expectation the pay-for-value movement will survive, albeit in some new forms.
“We think bundled payments will continue in the new administration. CMMI [Center for Medicare and Medicaid Innovation], for example, has significant statutory authority to test payment models. We feel like the Trump administration will use that authority to test the models that appeal to them,” he says.
“Indications are favorable for more state control [under the Trump administration], with states implementing programs through Medicaid system bundles and advanced payment models.”
With this attention to new payment models continuing, the onus will be on providers to state their case to acute care entities. The key idea, Matheson says, is it pays for PAC providers “to really reach out to hospitals, MA [Medicaid Advantage] plans, and managed Medicaid to build stronger relationships.” And with that outreach comes the need for hard, cold data showing real outcomes success in an efficient manner. “Data talks in this new environment,” he says.