Beware of bureaucrats bearing gifts, especially if wrapped in bundles
Beware of bureaucrats bearing gifts, especially if wrapped in bundles
HCFA, still working on PPS, now looks to bundle home health payments
Bun•dle: v. 1. To tie, wrap, fold, or otherwise gather together. 2. To dress warmly. 3. To fundamentally change the way Medicare provides home care. 4. To cause panic among home health providers by giving hospitals, or some other entity, control of Medicare reimbursement for all postacute care services.
While bundling wasn’t mentioned much during all the furor surrounding the Balanced Budget Act of 1997, the Health Care Financing Administration hasn’t forgotten about it. Hospital-affiliated providers had barely absorbed the reality of a 1999 prospective payment system when HCFA announced a demonstration project that "will pay one lump sum, or bundled’ payment for both hospital and physician services to acute care institutions."
It now appears that bundling payments to providers is HCFA’s main tool for controlling Medicare spending for home care. But this should come as no surprise. Health and Human Services officials have been talking about bundling for several years now. In President Clinton’s February budget proposal, there was a line item granting HCFA the authority to research postacute bundling.
So, like it or not, the rules of the game likely are changing again . . . and just when you thought nothing could top the Balanced Budget Act.
Thomas E. Hoyer, director of HCFA’s Chronic Care Purchasing Group in Baltimore, recently spoke with Hospital Home Health about bundling.
"The overall objective is to bundle all postacute services," he says. "It would require statutory authority, which we don’t have. And we don’t know how to do it yet, but that’s what we’re trying to find out. Who will get the bundle, that’s what we don’t know."
While HCFA explores bundling, it will continue with plans to implement PPS by 1999, as mandated in the Balanced Budget Act, which passed in August. "We expect to fully get into PPS," he says, "but we’re already bundling in some areas."
Hoyer says he think bundling for home care could take as long as five to six years to be implemented. "It’s not something people will get out of bed tomorrow and have to prepare for."
The Congressional Budget Office (CBO), in a report titled Medicare Spending on Post-Acute Care Services: A Preliminary Analysis, written for the House Budget Office during this summer’s Balanced Budget Act negotiations, proposes a bundled payment system model. The CBO’s system would be centered on local or regional vertically integrated health care systems that provide a seamless continuum of care hospital, subacute, home care, and outpatient services. HCFA would be charged with establishing separate bundled payment amounts for each diagnosis-related group (DRG). Hospitals would be paid a single prospective payment for both inpatient care and some amount of postacute care typically all services provided within 60 days of discharge from the hospital, the CBO says. Just who has the advantage?
The CBO acknowledges that bundling would place hospitals in a powerful case management role because they would control the flow of dollars, as well as manage the care of patients. Naturally, this is one of the objections raised by freestanding agencies that already feel hospitals have an advantage when it comes to referrals. But it should not be assumed that hospital-based agencies, or even hospitals themselves, will gain the upper hand if Medicare payments are bundled, some experts say.
"I am not sure HCFA always understands the dynamics of taking care of people," argues David Baker, executive director of St. Francis Home Health Care in Peoria, IL. "A lot of patients don’t access hospitals. How do you bundle that care delivery into some hospital DRG rate?"
Patients who enter the hospital for acute care and then go into home care don’t represent all of home care, Baker points out.
"It is a segment, not the majority. A lot of people who go to the doctor for a lung infection, say, or a leg infection because of diabetes, get it resolved and never go to the hospital. It worries me how that payment will be bundled. Home care as a delivery model doesn’t naturally fit with a hospital stay."
Baker, who works at the integrated system planning level, contends that bundling would tie Medicare payments to a higher level of care delivery, i.e., the hospital, at a time when provider cost limits are being lowered. "The whole goal is to use the appropriate level of care. If they [patients] need the hospital, make sure the stay is short, then move them though the continuum. Today, with other venues like ambulatory care centers and outpatient treatment centers hospitals are becoming less and less a part of the overall picture."
Baker and other industry experts see the federal government’s recent initiatives to limit home health utilization as illogical at best. To them, bundling just compounds the fallacy. If sick patients can’t use home health, they argue, then where will they go for care? Their answer: the hospital.
"I understand it’s Medicare," Baker says, "but I still contend a lot of people will not have the hospital as their primary venue of care, unless HCFA makes it so restrictive for home care that we are not cost-effective. Is HCFA’s strategy to restrict home care to where that advantage would be less effective and less benefit to beneficiaries? Maybe they’re sending us a veiled message here. What are they trying to tell us that health care centers on the hospital? That’s not where the industry’s going."
Postacute vs. chronic illnesses
For its part, the CBO concedes that its bundled payment model fails to address the plight of chronically ill beneficiaries, saying that probably no more than a third of Medicare home health visits would be part of any post- acute bundle.
But what happens to the other two-thirds, and how will those home health visits be paid for? That’s what HCFA hopes to find out in its study of bundling.
The Prospective Payment Assessment Commission has noted that alternatives to hospital-centered reimbursement could include paying a postacute care provider, or a provider service network that would oversee the continuum of services.
Hospitals may not even want the bundle, observes Dan Lerman, president of the Center for Hospital Homecare Management, a home care consulting firm in Memphis, TN.
"It could be an administrative nightmare," he says, "but put aside the administrative burdens and look at the bottom line uniformity, consistency, single payment, overall concern for episodes of payment across the whole continuum. I think hospitals should take a really hard look at it. Freestandings are not going to like it. Hospitals may not like it at first, but they’re learning to master the DRG system."
Indeed, freestanding agencies would not like bundling, agrees Ann Howard, executive director of the American Federation of Home Health Agencies in Silver Spring, MD. Howard’s organization represents most freestanding providers.
"HCFA has made no secret of its plans for bundling. They’ve been talking about that since the mid-80s. I remember a meeting with HCFA officials where they put a bundling proposal on the table, and in effect said, "What do you think about giving all the money to hospitals and tying it to a DRG payment?’
"If you bundle," she argues, "you in effect introduce elements of managed care within fee for service. Then you’ve lost patient choice of provider, with people being locked into systems with no redress when there are quality and access issues. You’d have all the same problems that are cropping up everywhere with managed care.
"And," she adds, "who would get the bundle? The most powerful group would get it the AHA [American Hospital Association]."
Yet, despite the uncertainty of the system and the fear it inspires in providers, it seems clear HCFA is moving toward bundling.
Says Hoyer, "Our conclusion is, that’s what the future holds."
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