New Medicare rules could decrease incentives for hospital overuse and curb visits to low-quality nursing homes. The same rules, however, could boost incentives for misuse of costly skilled-nursing care.
Under new accountable care rules, the CMS included the option for doctors to send patients directly to nursing homes for skilled-nursing care. The option—which waives the required three-day hospital visit before Medicare will pay for skilled-nursing care—instead requires patients go to nursing homes with at least three stars on Medicare's five-star quality scale.
Nursing home quality varies widely across the United States. The quality requirement would exclude roughly one-third of U.S. nursing homes that cared for 39% of nursing home residents and patients, according to data released last month by the Kaiser Family Foundation.
But it also removes what was long considered a check on overuse of skilled-nursing care, for which Medicare will pay more than typical nursing home visits. Roughly 90% of skilled-nursing facilities are also licensed as nursing homes.
The new waiver does not go into effect until 2017. It is also limited to Medicare's newest accountable care option, known as track three.
Track three will start in January alongside two existing tracks—including one that carries no financial risk for hospitals and doctors. Track three has the most financial risk and the greatest potential for reward, depending on how successfully hospitals and doctors in the ACO reduce medical spending and meet quality targets.
That risk is a key safeguard against overuse of skilled nursing, said those who urged the CMS to limit use of the waiver to ACOs with financial risk, including the Medicare Payment Advisory Commission. ACOS that don't slow spending must repay Medicare; that could discourage overuse of more-expensive skilled-nursing care even as skilled nursing is more accessible. (Medicare's managed-care plans also have risk for losses and can refer patients to skilled nursing without hospitalization.)
That risk, however, is also expected to dissuade many hospitals and doctors in accountable care organizations from track three.
Of the 220 Medicare ACOs with contracts that expire in December, an estimated 90% will renew and most will avoid track three, federal officials project.
Track three also lets ACOs know upfront which patients will be included in spending and quality performance scores. Other ACOs find out at the end of the year. The upfront notice is important for ACOs to ensure patients are eligible for skilled-nursing care without hospitalization, said Jeffrey Spight, president of Collaborative Health Services, the accountable care subsidiary for insurance company Universal American. Collaborative Health Services is a partner in 25 Medicare ACOs.
The nursing home industry and accountable care organizations urged the CMS to make the waiver available to all ACOs.
“It's an artificial barrier to you being able to get the patient to the best place for care the soonest,” said Dr. Paul Harkaway, senior vice president for clinical integration and accountable care at Trinity Health.
Trinity Health, the giant health system formed by the merger of Trinity Health and Catholic Health East, includes more than two dozen Medicare ACOs. Harkaway said he believes a waiver to skip a prior hospitalization before skilled-nursing admissions leaves doctors “unencumbered” to avoid hospitals, “the most expensive part of the system and perhaps the most dangerous.”
The waiver eliminates an incentive to admit patients to the hospital, consultants said. “Hopefully, what you can focus on is the appropriate treatment without artificial pressure from payment rules,” said Andrew Cohen, senior vice president at management consultant Kaufman, Hall & Associates.
Hospitals are expensive and sending patients directly to nursing homes “could be a major driver of savings,” said Rob Lazerow, a practice manager with the Advisory Board Co.'s healthcare program.
The American Health Care Association also urged the CMS to extend waivers to all ACOs, but it has criticized the CMS for using Medicare's star rating to determine participation. The star rating is not “an appropriate indicator of their ability to help an ACO achieve its goals under the waiver,” said James Michel, senior director for Medicare at the American Health Care Association, in a statement.
The CMS Innovation Center is also testing the waiver among a select group of ACOs that are at risk for losses. Some have developed “preferred” networks of nursing homes that have at least three-star ratings but also meet other quality indicators.
“The three-star rule is a starting place,” said Lazerow. “It's a floor.”
Without that flexibility to control costs and other changes, ACOs may find the alternatives to track three unsustainable, said Clif Gaus, president and CEO of the National Association of ACOs.
About 220 of Medicare's 405 ACOs must decide by this fall whether to renew for another three years. In the first year, 3 out of 4 of those roughly 200 ACOS failed to earn savings bonuses. One owed Medicare $4 million.
