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PPACA and Medicare Updates Part 2

Medicare FFS Hospital Readmissions Aren’t Dropping

Despite an intense effort to reduce readmissions at hospitals, new data from the Centers for Medicare and Medicaid Services (CMS) show that seniors and disabled in the Medicare program are still returning to hospitals at an alarming rate.

CMS says that readmissions are a major cost driver in the Medicare program, resulting in $17.5 billion in additional inpatient spending each year. About 10 million beneficiaries are readmitted each year within 30 days. Last week, CMS announced that its latest three-year trend study (from July 2008 through July 2011) showed that 19.7 percent of heart attack patients were readmitted within 30 days of discharge, a drop of only 0.1 percentage point. For those with congestive heart failure, 24.7 percent were readmitted in the same timeframe, again only a 0.1 point decrease. Readmissions for pneumonia were 18.5 percent, a 0.1 percent increase.
The fact that about 20 percent of seniors in these categories are being readmitted points to poor follow-up care in a very fragmented Medicare system. CMS is taking a number of steps to improve outcomes:

  • Reporting on readmissions as well as related hospital acquired conditions and Never Events is in place.
  • It is spending about a half a billion dollars through the Patient Protection and Affordable Care Act (PPACA) to help hospitals with high readmission rates to work with other health care providers to improve care coordination and transitions of care from inpatient hospitalization.
  • The Accountable Care Organization (ACO) initiative has quality measures tied to reducing readmissions – all conditions, COPD, and CHF. ACOs must meet quality outcomes in order to share in any savings they generate.
  • PPACA requires public reporting of readmissions. Critics argue that CMS is not aggressive enough in singling out the poorest performers, although credibility of data could be holding CMS back.
  • PPACA calls for penalizing hospitals with higher than expected readmission rates in several categories. In FFYs 2013 and 2014, heart failure, heart attack, and pneumonia are in scope. In FFY 2015, COPDD, CABG, PTCA, and other vascular procedures are added. CMS can add other conditions or cases in the future.

Time will tell whether the carrot and stick approach bears fruit in the fight to reduce readmissions and improve follow-up care.

PPACA’s Medicaid Maintenance of Effort Stands

Opponents of PPACA at the state level won a small victory when the Supreme Court essentially told the federal government that it could not penalize states that refused to expand Medicaid per the health reform law. But it appears that the federal government maintains an important tool to compel states to continue existing levels of support for their Medicaid programs.

In addition to the Medicaid expansion, PPACA also included a maintenance of effort (MOE) provision requiring states to continue existing eligibility standards and thresholds. This MOE applies until the state Exchanges and Medicaid expansions are due to go live on January 1, 2014 (until late 2019 for children). (States are free to curb provider rates or optional benefits and some states with eligibility over 133 percent can reduce eligibility if they are facing a fiscal crisis.) The Supreme Court did not explicitly strike down the MOE provision and its status has remained in limbo since the ruling. While the issue might yet be litigated by certain unhappy states, the Congressional Research Service (CRS) has analyzed the issue and concluded that the MOE remains in force. As such, the federal government could theoretically penalize states their entire federal Medicaid match if they reduce eligibility.

A showdown on the issue could occur with Maine, whose Governor argues that the court did open up the ability for states to make cuts to eligibility rolls. Maine is not the only state to complain that the MOE hobbles efforts to curb state deficits that have been at record levels during this economic downturn.

Frist to Obama’s Rescue

Former Senate Majority Leader Bill Frist, R-TN, has shocked a number of political pundits by writing an op-ed (published last week in “The Week,”) urging states to establish state insurance Exchanges.

Frist argues that opposition by many GOP Governors is misplaced and that the consumer health clearinghouses are actually a solid Republican idea. He states: “As a doctor, I strongly believe that people without health insurance die sooner. Sure, they can eventually go to an emergency room. But it is often too late. They wait longer to get a breast lump checked out. They wait until their nagging cough turns into a fulminant pneumonia. They skip preventive care and then show up to the ER with severe, costly, late-stage symptoms that are harder and more expensive to treat.”

Frist says the state Exchanges will truly allow states to design their own solution. “Simply put, state exchanges represent a distinctly American opportunity to improve our local communities and at the same time help our nation avert a major crisis. Let’s take the plunge,” he adds.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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