Post-Acute Care: the Elephant in the Room

Published July 12, 2016

I attended the America’s Health Insurance Plans (AHIP) Institute session last month in Las Vegas. Unsurprisingly, a major topic of discussion was how health plans can improve value. It’s been a hot topic since the passage of ACA – and it’s only getting hotter, as government (and commercial) payment models transition from fee-for-volume to fee-for value. But what was surprising, was the lack of discussion of post-acute care (PAC) integration and management solutions as a value improvement strategy. So why weren’t plans presenting innovative partnerships with PAC providers to jointly confront the elephant in the room?

It is a fact that PAC costs have been rising faster than other components of the health care sector. They rose by 70% from 2003-2013. We know from client experience that the care a patient receives post discharge can account for as much as 40% of the costs of a 90 day bundle as defined by CMS. And there is evidence that more effective use of home health services instead of institutional care not only reduces costs but may also improve outcomes.  For example, a recently released study of the CJR bundled payment initiative demonstrated a 25% decrease in per episode costs and a 38% reduction in readmissions for patients using home health care rather than institutional PAC.

If the PAC management opportunity is so significant, why didn’t plans enthusiastically showcase PAC value improvement strategies?  The answer is easy.  The solution, however, is not.

Simply put, a PAC solution remains elusive and will be elusive until current systemic issues are addressed.  The fragmented PAC delivery model, the prevalence of fee for-volume reimbursement with little risk sharing, the inability to consistently measure performance across the PAC continuum, and a lack of data and system interoperability to support performance improvement initiatives impede true PAC integration into value based care models. But, in spite of federal and state initiatives to restructure PAC payment and delivery models, progress will be slow unless the industry embraces a new, accountable model of PAC care.

We must create a new PAC paradigm addressing these systemic issues that impede care delivery integration, accountability, and risk. This new paradigm should be built upon innovative partnerships between PAC providers capable of managing care across the entire PAC continuum and sharing financial risk based on cost and quality performance. Discharge decisions and care transitions must be supported by evidence based predictive modeling capable of directing a patient to the right PAC provider based on his condition and ensuring the fastest, safest path to the home. To accomplish this, we must be able to assess the cost and quality of each provider in the network at the DRG level. This new model must incorporate systems interoperability across the PAC continuum, with health plan partners, and with members. Moreover, this model must be flexible to meet the needs of a variety of Medicare, Medicaid and Commercial plans today and as the market continues to evolve.

Today, there are a limited number of PAC organizations stepping up to the value based care challenge, but we will soon see more home health agencies and post acute facilities joining forces to manage the care continuum and take risk. This next generation of PAC is the future. Now, it is time for health plans to embrace the value of this new PAC model and encourage innovative PAC partnerships.