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The Best Solution for Declining Medicare Reimbursements

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I am one of the brave souls who takes the time to read the report issued each spring by the Medicare Payment Advisory Commission (Medpac). The report shows the numbers of Medicare beneficiaries and claims are growing; healthcare organizations are increasingly losing money on Medicare; payment increases certainly will not keep pace with declining margins; and Medicare policies will continue to incentivize quality and push providers to assume more risk. But the report also reveals that some healthcare organizations—referred to as “relatively efficient”—are making money from Medicare with an average 2 percent margin. How do you become one of these organizations? And how do you target and counter Medicare trends that impact your business?

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The Best Solution for Declining Medicare Reimbursements

  1. 1. The Best Solution for Declining Medicare Reimbursements
  2. 2. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Given the continued trends for declining Medicare reimbursements, I am one of the brave souls who takes the time to read the report issued each spring by the Medicare Payment Advisory Commission (Medpac). MedPAC is a nonpartisan agency that provides Congress with analysis about the Medicare program. Many of their reports are used to set policy for the Medicare program. The push for quality is strong and MedPAC is working to provide the right incentives for quality.
  3. 3. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Though the reading can be a bit dry, the information contained in the report is important—particularly considering the fact that the commission’s recommendations are influential in shaping policy. Medicare payment policies tend to set a precedent for other payers. I reviewed two documents published by MedPAC: June 2017 A Data Book, Health Care Spending and the Medicare Program June 2017 Report to Congress Medicare and the Health Care Delivery System > >
  4. 4. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements The Report to Congress covers 10 areas from stand-alone ED to provider payment. I am just focusing on a couple of the areas and showing a few key findings from the data distributed. Spending Utilization trends Readmission Discharge disposition Concentration of spending Low-value care Addressing Declining Medicare Reimbursements > > > > > > >
  5. 5. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Spending The reports show the spending trends are not affordable long-term. We have been able to lower the per beneficiary spend but we must sustain that trend. Medicare per beneficiary spend has fallen to an annual increase rate of 1 percent for the period 2010 to 2015. Projections for 2016-2025 show a higher annual growth rate of 4 percent in the per beneficiary spend. During the same time-period the aging of the baby-boom generation will cause an increase of enrollment of 3 percent annually. By 2030 there will be 81 million beneficiaries in the Medicare program. Overall Medicare spending will increase 6-7 percent each year and this is a higher projection than the GDP (Gross Domestic Product). GDP is projected to increase 5 percent annually. > > > >
  6. 6. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Utilization trends From 2006 to 2015 in the Medicare program, outpatient visits per beneficiary increased 47 percent and inpatient admissions declined by almost 20 percent. During the same time, Medicare length of stay decreased 7.7 percent. These facts will impact the location of services for the populations served. The graphic on the next slide illustrates this shift in services.
  7. 7. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Utilization trends Source: MedPAC analysis of CMS claims
  8. 8. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Utilization trends There have been a couple of shifts in the type of cases admitted to the hospital between 2006 and 2015. Circulatory system cases accounted for one-fifth of all inpatient discharges in 2015, and this is a decline of 6 percentage points from 2006. Musculoskeletal system cases accounted for 14 percent of all inpatient cases and this is an increase of 2 percentage points from 2006. Up 5 percentage points is infectious and parasitic disease cases which accounted for 9 percent of all inpatient discharges. The outpatient shift will continue, and we need to plan for facilities and consumer preference. > > >
  9. 9. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Readmission In 2013, the Hospital Readmission Reduction Program (HRRP) started calculating penalties for hospitals that have above-average readmission rates for selected conditions. From 2010 to 2015 the potentially preventable readmission rates declined from 12.9 percent to 10.5 percent for all conditions.
  10. 10. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Readmission The three conditions covered under the HRRP beginning in 2013 have experienced declines in potentially preventable readmission rates: AMI declined 3.6 percentage points Heart failure declined 3.1 percentage points Pneumonia declined 2.5 percentage points CMS started a program that involves a negative payment and hospitals have responded to the penalty by working to lower readmissions. > > >
  11. 11. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Discharge disposition In 2015, about 46 percent of all Medicare fee- for-service patients were discharged from an acute care hospital to home, without any organized post-acute care. This represents a decrease 7 percentage points from 2006. More Medicare patients are being discharged to post-acute care services. Twenty-one percent are discharge to skilled nursing care and seventeen percent are going home with organized home-health services.
  12. 12. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Discharge disposition MedPAC is recommending implementation of a unified payment system for post-acute care. Medicare currently has seen differences for similar patients based on the post-acute venue chosen. The supply and use of post-acute providers varies considerably across the country. MedPAC would like payments based on patient characteristics rather than site of service.
  13. 13. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Discharge disposition Bundle payments would help in this area and place accountability with the organization that assumes the risk. Also CMS may revamp the payment system for post-acute care by 2020.
  14. 14. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Concentration of spending The costliest 25 percent of beneficiaries account for 84 percent of the spend. The costliest areas of spend include dual eligible (Medicare, Medicaid recipients), beneficiaries with multiple chronic conditions, users of inpatient services and those in last year of life. CMS needs to develop programs that target and value care coordination.
  15. 15. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Low-value care MedPac devoted several charts to display low-value care. The definition of low-value care is the provision of a service that has little or no clinical benefit. They used a set of 31 measures developed by a team of researchers. Then they applied dollars to the list, and the spend for 2014 was $2.4 to $6.5 billion. The list includes testing, imaging and screening. Some high spend examples are stress testing for stable coronary disease and imaging for nonspecific low back pain.
  16. 16. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Low-value care MedPac stated this is just a start to determining the cost of low-value care. Providers should be evaluating the 31 measures in their institutions. We may currently get revenue for the services, but we need to shift to a value lens.
  17. 17. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Declining Medicare Reimbursements Addressing Declining Medicare Reimbursements I am hoping you can see from these facts that those recommending new policies will continue to push providers for quality and value. More beneficiaries are entering the program and there will be constant pressure to control the cost. There is a willingness to pay for better outcomes. Using data to derive insightful analytics through platforms such as the Health Catalyst® Data Operating System (DOS™), healthcare organizations can approach these changes with confidence that they can adapt and thrive in a more value-based environment.
  18. 18. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. For more information: “This book is a fantastic piece of work” – Robert Lindeman MD, FAAP, Chief Physician Quality Officer
  19. 19. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. More about this topic Link to original article for a more in-depth discussion. The Best Solution for Declining Medicare Reimbursements 2015 Sustainable Growth Rate Repeal: The Future is Here Bobbi Brown, VP of Financial Engagement The Medicare Sustainable Growth Rate Repeal: Implications for Your Health System Brian Ahier, President of Advanced Health Information Exchange Resources, LLC; Laura Dietzel
  20. 20. © 2016 Health Catalyst Proprietary. Feel free to share but we would appreciate a Health Catalyst citation. Other Clinical Quality Improvement Resources Click to read additional information at www.healthcatalyst.com Bobbi Brown is the Vice President of Financial Engagement for Health Catalyst. Ms. Brown started her healthcare career at Intermountain Healthcare supporting clinical integration efforts before moving to Sutter Health and, later, Kaiser Permanente, where she served as Vice President of Financial Planning and Performance. Ms. Brown holds an MBA from the Thunderbird School of Global Management as well as a BA in Spanish and Education from Misericordia University. She regularly writes and teaches on finance-related healthcare topics. Bobbi Brown

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