News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

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Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Medicare Targets Avoidable Hospital Readmissions to Jumpstart Delivery Reform

Bundled Payment Demonstration Project Changes How Labs Would Be Paid

Efforts in the nation’s capital to reform healthcare are still in the formative stage as the new President and the new Congress consider various approaches. Meanwhile, the Centers for Medicare & Medicaid Services (CMS) started the new year by launching pilots for a bundled-service payment scheme. Not only may this be the beginning of the end of the fee-for-service payment system, but it has important implications for clinical laboratories and anatomic pathology groups.

The bundled payment system demonstration projects are a first step to what’s coming next. The Medicare Payment Advisory Commission, better known as MedPAC , released its blueprint for reforming the delivery system to Congress on March 17 in its annual Report to the Congress: Medicare Payment Policy.


Reducing Hospital Readmission: How Hospitals and Insurers are Making Strides

After discharge, almost one in six patients land back in the hospital due to complications that could have been prevented with better follow-up care! According to the Institute for Healthcare Improvement (IHI), nearly 18% of Medicare patients admitted to a hospital are readmitted within 30 days of discharge, accounting for $15 billion in spending, according to the Medicare Payment Advisory Commission Now, regulators, insurers, employers, and quality-measurement groups are all considering methods to tie hospitals’ payment to lower readmission rates.

“The experience of multiple hospitalizations can take a devastating toll on the human psyche and the quality of life for patients and their caregivers,” said Mary Naylor, a professor at the University of Pennsylvania School of Nursing. There are about 5 million readmissions a year in U.S. hospitals, with approximately a third occurring within 90 days of discharge. IHI research suggests that transitional care programs, which follow patients for varying periods of time at home, reduce admissions by up to 46%.

IHI is working with hospitals to reduce readmissions by: 1) identifying patients at risk for return; 2) scheduling follow-up doctor’s appointments before patients are discharged; 3) sending nurses to patients’ homes within a few days of discharge; 4) monitoring patients at home; and, 5) educating patients and families on how to adhere to medication schedules and self-care regimens. Part of the problem in getting hospitals to adopt these types of discharge programs in the past was that hospitals did not get paid to coordinate care after a patient left. That’s rapidly changing, now that large managed-care groups and insurers are experimenting with programs to cover such services.

Both Aetna and Kaiser Permanente unveiled pilot programs this year that focus on congestive heart failure patients, a third of which are generally readmitted within 30 days of discharge with complications from the condition. Early results from Kaiser’s program suggest success. Its two medical centers involved in the pilot program decreased their hospitalization and readmission rates for heart failure patients to about a third of Kaiser’s system-wide average.

A similar program developed at St. Luke’s Hospital in Cedar Rapids, Iowa, cut unplanned readmission rates in half, to 6%, as of last January. Prior to discharge, patients at St. Luke’s were asked to restate in their own words what they had been told about how to follow care instructions at home. These patients were then sent home with a refrigerator magnet that included a list of symptoms for which they should watch and an emergency number to call.

This emphasis on reducing readmission rates is no surprise to clients and regular readers of Dark Daily. The American healthcare system is actively looking to reduce medical errors, increase health outcomes, and at the same time cut the cost of care. Putting hospital readmission rates on the radar screen is consistent with this healthcare trend.

Further, the pay-for-performance dynamic makes sense. As the health insurer sees a reduction in costs because of a falling rate of hospital readmissions, it can pass these savings along to those hospitals in the form of pay-for-performance incentives or similar reimbursement arrangements. For the laboratory industry, the emphasis on reducing hospital readmission rates is a reminder that eventually pay-for-performance arrangements will arrive at the doorstep of laboratory medicine. Laboratories should be establishing internal performance measurements so they are prepared to document how their quality and efficiency improves over time.

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