Various legislative programs in the Affordable Care Act and other efforts in the commercial insurance market are prompting hospitals, accountable care organizations (ACOs), and managed care organizations (MCOs) to shorten their referral lists. In this new world, the performance of home health agencies, hospices, and skilled nursing facilities can have a financial impact on a referring institution’s bottom line. Although initial selection of participants may be based on softer factors and relationships, the process will quickly evolve into a numbers game because decision makers will view it in terms of WIIFM —“What’s in it for me?”
Home health agencies will be assessed based on several factors, including the following:
- Readmission rates. Since there are direct penalties related to high readmission rates for hospitals under Medicare and increased costs for bundlers, ACOs, and MCOs, readmission rates will be considered first and foremost in assessing home health agencies. The likely source of comparison will be Medicare Home Health Compare scores because they give uniformity in assessing performance.
- Emergent care use. Since the emergency room (ER) is only one step away from an admission, emergent care use is closely tied to readmission rates. In addition, ER doctors are trained to admit when in doubt because of liability issues. The best way to eliminate this risk is to keep patients away from the ER when possible. Once again, the source of comparative data will be Medicare Home Health Compare. To keep patients away from the hospital and/or ER, a telemonitoring program will need to be integrated into home health agencies’ operations through either machine or telephone calling. Selection committees will look for a system that is in place that anticipates and treats issues before they become critical.
- Patient satisfaction scores. Since hospitals are incentivized on patient satisfaction as part of their Medicare value-based purchasing, they will be concerned that a poor experience with a partner to whom they refer a patient could rub off on their own scores. Once again, public data from Home Health Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) will be the “gold standard” by which everyone will be judged.
- Cost effectiveness. For ACOs and other “bundled payment” arrangements, senior-level management will focus on those agencies that can do the job for less. That means agencies that demonstrate above-average Medicare Home Health Compare scores at a lower cost per patient. After years of trying to maximize reimbursement, agencies could be judged on having lower recert rates, lower case weights, and higher low utilization payment adjustment (LUPA) rates.
Knowing how you stack up against your competitors in terms of cost effectiveness will become very important in this arena. In looking at your agency’s performance, be sure to take into consideration differences in patient disease mix. For more information about how to evaluate your agency’s performance, check out our Key Indicators by Diagnosis Report, Disease-adjusted Financial Benchmarks Report and How to Use Benchmarking to Boost Performance.
- Pass or fail factors. Lastly, there will be a set of less quantifiable criteria — clinical sophistication, financial stability, cultural fit, and corporate presence (i.e., the ability to sit at the conference table as an equal). For these factors, it will be about whether you pass the test or not. Selection will evolve based on those quantifiable indicators that have the greatest impact on the financial performance of the network leadership’s organization(s). Under the Affordable Care Act, we have taken the keys to the business away from the financial people and handed them over to the clinicians, where they belong.
In the past, providers have focused on developing relationships. While these will remain important, the selection process will change from a “beauty contest” to a “numbers game.” To learn more about the new post-acute network selection process and where your agency stands among competitors, email us or give us a call at 215-657-7373.