A Novel Solution To A Serious Problem

Everyday, thousands of baby boomers enter the Medicare program, continuing a demographic trend that has long been anticipated and is now upon us.  While we hope that these individuals can remain healthy and vital, the reality is that a significant portion will, for any number of reasons, require some form of post-acute care (PAC) following an injury, illness or hospitalization. Physicians, nurses, therapists and other caregivers are working diligently to meet the needs of this group, but can Medicare keep up?

Unless changes are made soon, probably not.  The number of new Medicare beneficiaries is staggering in and of itself. But Medicare’s antiquated fee-for-service payment arrangement, coupled with a lack of care coordination and a system that doesn’t always see patients treated in the most cost-effective setting means that we’re spinning our wheels when it comes to making any sort of real progress toward reducing Medicare costs. Disjointed care means patients re-enter the hospital far too often, at a significant expense to taxpayers and beneficiaries. And without a better way to reimburse providers for the quality – not quantity – of care they provide, Medicare will almost certainly buckle under the financial strain.

Post-acute care providers, bipartisan Members of Congress, and President Obama have all called for improvements that would address these shortcomings and ensure the future health of Medicare and those it serves. Properly structured, these improvements, achievable through a “bundled” payment system, would not only strengthen care coordination and improve patient outcomes – it could also achieve significant savings without recourse to painful provider cuts. Indeed, bundling could save billions of dollars while modernizing Medicare post-acute care policy and setting an example for healthcare throughout America.

Post-acute care bundling reform was included in President Obama’s proposed budget for 2015, and it is consistent with Secretary Burwell’s call for a renewed focus on “value, not volume.”  This perspective is shared by leading lawmakers as well who are working hard to get Medicare on the right track.

A prime example is the Bundling and Coordinating Post-Acute Care (BACPAC) Act, sponsored by Congressmen David McKinley and Tom Price, which would phase-in clinical condition-specific site-neutral bundled payments modeled on the Diagnosis Related Group (DRG) system that has been successfully utilized in hospitals for more than 30 years.  Under BACPAC, a PAC episode would begin the day of a patient’s discharge from the hospital and continue for 90 days managed by a Coordinator.

BACPAC would secure patients and families’ freedom to choose their Coordinator, which would manage patient care for the 90 days following hospital discharge, as well as their post-acute care providers.  Importantly, BACPAC would align incentives so that all participants would have a vested interest (thanks to risk and reward sharing) to ensure that patients receive the care they need in the most clinically appropriate, cost-effective settings available – and to help them avoid costly return trips to the hospital.

BACPAC would also provide much-needed reimbursement stability to physicians and PAC providers.  Physicians would receive payment for transitional care management and patient oversight – which is critical for effective care coordination – and all PAC providers would receive reimbursement at an amount not less than the amount they would otherwise be paid under current law.

Finally, BACPAC would ensure the achievement of savings to sustain the Medicare program and reward high-quality, cost-effective providers. The BACPAC model reduces overall spending by 4 percent over the next 10 years (without reducing any provider’s rates), and it distributes 100 percent of all savings achieved above and beyond that level to the Coordinator, discharging hospital, managing physician, and PAC providers who serve each patient.

In short, BACPAC would achieve savings via more appropriate and effective utilization – not through the imposition of further rate cuts.

For years, physicians, hospitals and post-acute care providers have faced steep Medicare cuts – cuts that often came at the expense of Medicare’s vulnerable and elderly patient population. PAC reform solutions like BACPAC offer a new approach: real savings without draconian cuts, thanks to the use of time-tested reforms that are patient centered as well as fiscally smart.

The millions of Americans who participate in Medicare should have ready access to cost-effective post- acute care in a setting that makes the most sense for their condition. And those reaching Medicare age in the years to come should not have to worry about whether the program will be financially stable enough to help them. The time for smart change is now, and BACPAC offers an excellent place to start.



Eric Berger is the CEO of the Partnership for Quality Home Healthcare, a coalition of the nation’s leading innovators of home healthcare dedicated to improving the integrity, quality, and efficiency of home healthcare

Morning Consult