CW Ep. 17: Healthcare & Policy with Meredith Mills
Meredith Mills, COO of Country Meadows Retirement Communities, discusses the Medicare Innovation Center and its impact on senior living.
So, late last year I gave a talk to about 20 first year med students from a nearby university. You can guess how excited they were to come to a long term care facility to hear about geriatric care. I went around the room and not a single one of them, when asked, was interested in pursuing any type of internal medicine, let alone geriatric care. And frankly, I think they thought that the care of older people was as many people perceive: extremely unsexy.
My goal over three hours, as it often is in giving presentations, was to just get them to pay attention and maybe walk away learning something. However, as we went through our planned time together, having reviewed everything from accountable care organizations to hospice. I was pleased to see that their eyes began to open as I described the way that almost every single medical specialty will need to deal with an understanding of Medicare payments and expectations because of the changes in Medicare to reward better coordinated care and care outcomes, and the rapidly growing number of older adults in the U.S.
We ended the day with them participating in a Parkinson’s-focused exercise class with many of our residents, which I think really gave them a sense of the humanity behind what we do. And we left with many of these medical students asking me how they could volunteer, even work at our community. Honestly, I had just hoped to keep them off their phones during those three hours, but it was really clear that I had gotten my point across.
Yes, that’s right. I’m a Medicare innovation geek. And I love teaching and learning about what’s going on in terms of changes in our Medicare system, Medicare innovation is changing payment structures at a rapid pace. And no matter what part of the healthcare industry you work in, you will be affected by the shifting reimbursement in one way or another. Although there’s often the argument as to whether we, as providers of assisted and senior living, offer either hospitality or healthcare. In my opinion, there has never been a choice. I’m a strong believer that as an industry, we absolutely cannot ignore the significant role we play in the health and wellness outcomes of Medicare beneficiaries, even if it’s just due to the benefits of social and emotional engagement that we offer through our communities.
Beyond just the psychological benefits of socialization, there are the more important social determinants of health. Things like access to adequate nutrition, safe housing and transportation, which have all been proven to directly affect the health outcomes of older adults. And by promising a supportive environment to our residents, older adults who often have multiple comorbidities, medical interventions and care needs, we must be cognizant of the fact that they depend on us, making us as providers responsible for organizing and coordinating their health care needs and thus, ultimately responsible in part for their health outcomes and costs.
In fact, Medicare believes so heavily in the effects of social determinants of health, that it has begun to allow Medicare advantage plans to cover services outside of the traditionally clinical offerings. Medicare advantage providers have begun to experiment with supporting food and nonclinical home care needs, post hospitalization, as well as transportation to appointments and fitness and exercise benefits. Who knows at some point, maybe they’ll even recognize the importance of the stability and support we offer in our setting and include senior living as a Medicare advantage benefit.
As I explained to the medical students, the shift in Medicare payments has been building, and though the Medicare Innovation Center began as a directive of 2010 Affordable Care Act, aka Obamacare, it was obvious before that that our aging U.S. population was going to outpace the tax revenues needed to support the Medicare program. It was also obvious that we were paying for the wrong things for older adults.
One of the main benefits of our free market healthcare economy is the extensive opportunity for innovation in medical technology that is impossible in most other healthcare systems. However, along with this extensive access to medical technology, we’ve seen people live longer and with more comorbidities, which require even more medical intervention to support. This ultimately causes strain on our payment system through Medicare, which supports the majority of U.S. adults over the age of 65.
What we’ve seen with Medicare innovation is a sincere investment in shifting the incentive of all providers to older adults, doctors, hospitals, specialists, skilled nursing and home health, and more to shift away from the traditional focus on providing more billable services to Medicare, the traditional and usual practice of fee for service, and move instead towards payments based on value and quality outcomes.
The Centers for Medicare and Medicaid Innovation were authorized by the Affordable Care Act to continue to fund and support innovation products whose results showed that they either reduce spending without harming the quality of care or improve the quality of care without increasing spending. However, changing such a large and complicated healthcare system is easier said than done. And Medicare has utilized both carrots and sticks to make this happen through various methods of payment and delivery system reform in healthcare.
So today I’m going to highlight for you as I did for my medical student friends, some of the key incentives created to change the behavior of Medicare providers and truly our health system as a whole.
Innovation number one: the hospital readmission reduction program. This innovation program was one of the earliest innovations created by the Medicare Centers. And it created a reimbursement penalty targeting hospitals with excessive 30 day readmission rates for select clinical conditions, including some significant chronic conditions like heart failure and COPD that should otherwise be cared for outside of the hospital with thoughtful interventions and care planning. This program was truly a stick tactic by Medicare because it can result in up to a 3% reduction in a hospital’s total Medicare reimbursement and it’s a mandatory program for all hospitals accepting Medicare funds. Hospitals can only be penalized. There’s no bonus potential for low readmissions. And in fiscal year 2020, 81% of U.S. hospitals received some level of penalty according to the advisory board group.
Despite this penalty’s only program, there’s been some success. According to a 2020 Kaiser Family Foundation article, this program has shown declines in Medicare patient readmissions since its inception 10 years earlier. So this progress, the hospital level, how does it affect senior living well being one of the original innovations U.S. operators or providers may have been seeing for some time, the shift with hospitals utilizing elongated emergency room or observation stays to avoid readmitting some of your residents who have had hospital trips grouped together in less than 30 day periods. But as the program went on, you probably also saw hospitals making thoughtful investments in care coordination at the primary care level and in other interventions that helped improve the quality of care for our seniors. Definitely a decent starting place.
Innovation number two: accountable care organizations. The concept of the ACO establishes financial accountability for the quality and the total cost of care for an attributed population of at least 5,000 Medicare beneficiaries by a group of primary care physicians, often, hospital-based. What this means is that essentially a group of primary care physicians receives a set amount of money each month to cover the entire cost of care of their Medicare beneficiary patients. And if they’re able to ensure that care is coordinated and provided for at less than that amount, they make a profit. However, if care coordination and quality is poor or a hospitalization or other large cost service occurs, the physician or group loses money on that beneficiary. In addition, the physician or group gains revenue or bonuses for high scores on quality outcomes, based on the guidelines of this Medicare Innovation Program. This upside and downside risk program accounts were both a carrot and a stick through the Medicare Innovation Center.
The concept of an accountable care organization functions almost like a provider led Medicare advantage plan. Efforts and investment in care coordination and management of chronic diseases pays off via reduction in high cost care spending and ultimately results in quality bonuses and incentives. And over 500 Medicare shared savings accountable care organizations were participating in this voluntary program as of 2020, according to the advisory board group. Does this idea of intensive care coordination sound like something senior living already participates in and provides? So when will we get a bite of the carrot? I think these innovations start to offer a hint.
And lastly, innovation number three: bundled payments. Yeah, probably heard of the bundled payments for care improvement program also known as bundles, which was also an early payment reform initiative that emerged though it has gone through several iterations through the innovation center. I basically look at this program as a pretty effective and swift move from fee-for-service to quality-based outcomes, payments in it. A hospital or system owns the bundle, the total pay for all Medicare part A and B services associated with a 90-day episode of care, rather than sending Medicare a bill for all the services.
During that 90-day period, the provider is measured retrospectively on the total cost that they spent on care versus the benchmark spent for an episode of care for one of the bundled care treatments, such as a hip or knee replacement. If their cost exceeds the benchmark set by Medicare, the provider loses, but if they spend less and still hit quality goals, they gain financially. Despite this program remaining voluntary, over 1,500 organizations are participating in it as of 2020. It’s both a carrot and a stick from the Medicare Innovation Program. Yet, clearly providers are figuring out how to provide higher quality care at a lower cost. And Medicare has added additional episodes of care over time.
As senior living providers, we may see the effects of this program in more seniors being sent back to our setting rather than first having a skilled nursing or inpatient rehab stay because the program is wanting to save money through this bundle. The true balance for providers participating in this bundle program is in not sending patients home or in our case to their senior living community too soon as this could lead to a hospitalization, which is a problem not only in the rehospitalization reduction program, but also in the total cost of the bundle.
Now, by seeing the direction of Medicare reimbursement and its increasing focus on care coordination, rewards for quality of care and reduction in spending through care planning and intervention, you, like me are probably thinking, how do I get rewarded for what I’m already doing in saving Medicare money and providing better outcomes for seniors? Or, if you aren’t invested in some type of clinical assessment or care coordination for your residents, then you probably want to think about what it means to be providing true wellness to your residents at every possible level.
Certainly as senior living providers, we want to maintain hospitality and we don’t want to be an all-clinical model, but there are multiple types of wellness and we can strive to provide them all and maybe even get reimbursed at some point for providing high quality care and care coordination, because it’s the right thing to do.
So how would this be possible? So for a long time, I’ve been a fan girl, admittedly, of pioneers like Lynne Katzmann of Juniper Communities who’ve talked about this concept for many years. Lynne and other innovative providers believe that assisted living communities provide the key differentiating factor that many hospitals and physicians groups are missing in providing the best quality of care: coordination of resources at the right place and time for the senior, knowledge of the individual as a person and provision of the social determinants of health. And soon we may not only see the ACOs and hospitals paying more attention to our level of care, but more likely we’ll be able to take our fate into our own hands and have opportunities to own our own Medicare advantage plans or perhaps work with independent physicians groups and ACOs.
The good news is that the goals of the Medicare Innovation Center and senior living communities are finally starting to align. And maybe we’ll gain not only the best possible continuum of care for seniors, perhaps even without leaving our communities, but maybe we’ll even gain some financial rewards for a job well done. And you said Medicare innovation wasn’t exciting? Watch with me as it unfolds on Bridge the Gap Contributor Wednesday and connect with me at btgvoice.com or #bridgethegap. See you next month.