About 800 hospitals in 67 regions — including 18 facilities on Long Island — now are being held financially accountable for the quality and cost of hip and knee replacements in Medicare patients, not just for the surgery but for 90 days after.
Under a new federal rule, if these older patients get well and go home quickly, hospitals could make money. If they have complications and end up being readmitted to the hospital or have long stays in a rehabilitation facility, the hospitals could end up owing the Centers for Medicare & Medicaid Services money.
The rule is part of the Affordable Care Act’s goal of reducing costs and improving care by changing the way hospitals are paid. Hip and knee replacements are the most common inpatient surgery for Medicare patients but their cost and quality vary widely, according to CMS. Infections or implant failures can be three times higher at some facilities than others and costs can vary from $16,500 to $33,000 across regions.
By bundling payments for the operation and for the post care to hold hospitals accountable for care following surgery, the hope is to force better coordination among hospitals, doctors and rehab facilities to reduce costs, complications and hospital readmissions.
Under the rule, CMS will set a target price for the type of surgery to be performed. Then the hospital will either earn a financial reward if it keeps the surgery and post care below the target price or be required to repay Medicare for a portion of the spending above the target price.
The rule is projected to save Medicare $343 million over five years.
Kevin Dahill, chief executive of the Nassau-Suffolk Hospital Council, predicted the change “is just the tip of the iceberg.”
“The government — and commercial payers too — have concluded this is the only way they see to change incentives to drive costs down and, quite frankly, they are probably right. But there will be some angst along the way,” he said. “I think a lot of firewalls between different providers will start to break down — and that has got to make communication better for the patient at some point. But I don’t think we’re going to turn a switch on. It’s going to take fits and starts.”
Michael Balboni, chief executive of the Greater New York Health Care Facilities Association, which represents more than 80 nursing homes, said he expected “there will a thinning of the herd among those [rehab facilities] that won’t be able to adjust.”
“It’s no longer ‘keep them as long as you can;’ now it’s about getting them out as soon as possible — which is fine,” he said. “But how do they [rehab facilities] make up what they are losing?”
Both Balboni and Richard Herrick, chief executive of the New York State Health Facilities Association, said the key will be for them to forge close relationships with hospitals. Herrick, who said about 75 to 100 of its 300 members are affected by the new rule, said there’s “heightened concern” among his members. On the other hand, he said, “there’s also an opportunity to collaborate and perhaps identify efficiencies.”
Some Long Island hospitals have already begun the transition. Huntington Hospital, part of Northwell Health, Winthrop-University Hospital in Mineola and South Nassau Communities Hospital in Oceanside have been part of a bundling payments pilot program started two years ago.
Dr. James Capozzi, Winthrop’s chairman of orthopedics, said that when the hospital looked at costs, it found the bulk of expenditures were in postoperative care in rehab facilities. That was despite the fact, he said, that most joint and knee patients in post-op facilities didn’t do any better than those who recovered at home.
Now Winthrop patients who do go to a rehab facility following their knee or hip replacement tend to stay for significantly shorter periods, he said. The hospital added a nurse care coordinator who visits a patient’s home before the operation to see if it is safe following surgery. Patients start “preconditioning” exercises before the surgery to ensure they don’t lose strength. If the patient goes to a facility, the nurse coordinator visits to ensure the patient is getting what he needs to get back to normal as quickly as possible. When the patient goes home, the coordinator sets up visits from a home care nurse and physical therapy.
“The whole goal is to restore function and activity,” Capozzi said.
Care has not suffered. In fact, readmissions rates were cut in half, according to Matti Hasselmann, Winthrop’s administrative director for the orthopedics department.
The hospital also has cut costs by about 8 percent overall, better than CMS’ goal of 2 percent savings and better than their own projections, Capozzi said.
“Because costs are rising every year, we were hoping to hold the ship steady,” he said. “When we ended up actually saving costs, we thought, ‘This is really cool.’ ”
Northwell Health is using a similar approach across its 14 hospitals that do hip and knee replacements, based on its experience with the pilot project at Huntington Hospital and its Lenox Hill Hospital in Manhattan. Before the surgery, patients get a phone call from a social worker to address any fears and concerns. In the hospital, patients are assigned a navigator whose job it is to coordinate care once they leave. The also get a cellphone number to directly call the navigator in case of problems.
Dr. Zenobia Brown, medical director of Northwell Health Solutions, its care management organization, said the health system has hired seven navigators and will be hiring about five more.
Like other hospitals, she said that strong relationships with rehab facilities are key to success of the program. Speaking as if she were a rehab facility manager, she said: “If I know I’m only going to keep patients for 10 days instead of 20 days, I need twice as many patients. The only way I am getting that is if I am known as a rehab facility that gives excellent service for patients.”
The pilot program has been successful. Huntington Hospital has nearly tripled discharges to homes and reduced 30-day readmission rates by 20 percent. At Lenox Hill, 60 percent of patients are discharged directly to their homes and readmission rates have fallen 40 percent. Brown said she doesn’t have financial data on 2015 savings but in 2014, Huntington netted $110,000 over Medicare costs, which she called “a good first step.”
“I think that despite the fact that Medicare is mandating this, it is the right thing to do for the patient,” she said.
Other Long Island hospitals are in varying stages of instituting changes. Brian Fullerton, the director of revenue cycle at Stony Brook University Hospital, said Stony Brook is analyzing data to see where it could potentially save money while continuing to provide a high quality of care.
Dr. Joel Shu, vice president of population health at Catholic Health Services, said the health system is in the process of adding several orthopedic navigators throughout the system’s six hospitals. Patients will be required to attend presurgical classes and the health system is adding home care staff and more at-home physical therapy and rehabilitation services. Equally important, he said, it is working closely with the health system’s own rehab facilities and will be forming collaborations with other area facilities.
“This will be a concierge-like experience,” he said.
South Nassau has been part of the two-year pilot program since July. Mark Bogen, South Nassau’s chief financial officer, said the hospital has put in place many of the same changes, hiring a patient navigator, sending more patients home after surgery and using home health aides rather than automatically sending patients to a rehab facility.
“It depends on what the patient requires,” said Alex Balko, vice president of finance. “But if they can go home, we send them home.”
Balko has had personal experience with the shift to home care. His wife — not on Medicare — broke her hip skiing in January and required screws. After being discharged from the hospital, she went home and was visited once a week by a home care nurse.
“It worked well,” he said. “She’s very happy.”