Stephanie Anthony, J.D., M.P.H.
Stephanie Anthony, J.D., M.P.H.

Hospitals traditionally have viewed a patient’s discharge as the endpoint of their care responsibilities. Little attention was paid to the next steps in treatment once the patient left the building. Movie scenes showing miraculously cured patients waving cheerful good-byes to their hospital caretakers are, however, a Hollywood invention. 

In reality, hospital stays frequently are just one step in ongoing episodes of care. Ensuring a smooth transition from acute to post-acute and long-term care settings is critical to achieving optimal health outcomes, as well as preventing unnecessary hospital readmissions and emergency department visits.

Numerous forces — from the exploding growth in the 65+ population to increasing penalties for hospital readmissions — are converging to make acute care providers focus on what happens to patients post-discharge. Both payers and acute care providers are taking notice of the critical role PAC and LTC services play in ensuring the continuity and quality of care. Skilled nursing facilities, home care, inpatient rehabilitation facilities and long-term acute care hospitals are key to addressing the complexities of patients who are elderly, chronically ill or struggling with behavioral health issues.

These patients historically have been served in unmanaged fee-for-service delivery systems. The Affordable Care Act, however, is driving fresh opportunities to improve quality and contain costs for these populations through new value-based purchasing arrangements. 

Innovative payment models — including bundled purchasing (paying for episodes of care across multiple settings) and global payments — incentivize quality, cost efficiency and care coordination. Clearly, the time is right for real change — and real progress — in the PAC and LTC arena.  

What’s Driving the Change in PAC and LTC?

1.         A dramatically changing population

According to the Congressional Budget Office, by 2050, 20% of the U.S. population will be 65 or older. One study estimates that more than two-thirds of 65-year-olds will need assistance to deal with impaired functioning during their remaining years. Adding to the soaring demand for LTC and PAC services is the growth in younger patients with chronic and disabling conditions.

To be prepared, PAC and LTC providers must develop:   

  • New treatment models that address chronic disease management, as well as integrated or coordinated care at the provider level across physical health, behavioral health and social support needs, including access to affordable housing.
  • New staffing models that are person-centered and interdisciplinary. Care teams should include not only primary care or specialty physicians but also care managers, nutritionists, patient navigators and family members. It’s also important to include non-traditional providers, such as peer counselors and community health workers, to supplement nurses, home health aides and personal care attendants.
  • New training curricula to ensure all providers and care managers are trained in emerging care coordination and management models that support patients with chronic and co-morbid conditions. Both traditional  and non-traditional providers and care managers must be trained in care management goals, effective interventions for specific populations, and Information Technology (IT) systems and analytic tools for managing patient care.

2.   Increased payer and policymaker attention on spending, quality and outcomes

Medicare and Medicaid are focused on reducing hospital readmissions and variations in spending and margins across PAC and LTC settings, as well as ensuring appropriate service utilization. Overall, we have significant opportunities to improve care and limit costs for populations with chronic conditions. Forces driving change include:

  • Financial penalties for hospitals – and, soon, for SNFs and other PAC providers — for avoidable hospital readmissions.
  • A shift to value-based (versus volume-based) payments and a commitment to population-health management to improve quality and control costs.
  • Increased capitated managed care arrangements for elderly and disabled populations. To stay in network, PAC and LTC providers must demonstrate quality and cost effectiveness.
  • A focus on standardized health and functional assessments to ensure patients are placed in the lowest-cost facility that meets their needs.
  • A rise in quality measurement and reporting.  PAC and LTC providers must develop metrics to assess their results—and implement needed improvements.

3.   The integration of large health systems with PAC providers

Facing financial penalties for readmissions, health systems are increasingly looking to partner with PAC providers. Three-quarters of hospitals subject to Medicare’s Hospital Readmissions Reduction Program are being penalized for 30-day hospital readmissions — with Medicare estimating fines totaling $428 million over the year. That amount of money is a strong motivator for hospitals and health systems to find ways of partnering with PAC providers to lower readmission rates. There are several potential integration paths:

  • Clinical integration. Seeking to increase hospital throughput, ease transitions across care settings and prevent readmissions, hospitals and health systems are developing screening criteria to identify high-need, high-cost populations who would benefit from care management/care coordination and referrals to PAC settings.  To support improved care management and coordination, hospitals are  investing in data analytics and information technology systems, including building integrated or interoperable electronic medical records (EMRs); sharing physician staff across acute and PAC settings;  and developing effective treatment, transition and follow-up plans for patients and their families.
  • Structural integration. Health systems are creating care systems that manage treatment across the care continuum. Called continuing care networks or integrated delivery systems, these systems might own PAC assets or work with them through affiliated partnerships.
  • Financial integration. Hospitals and PACs are testing approaches for sharing financial risk and benefiting from mutual savings through emerging payment models that pay for episodes of care across multiple settings.

Acute, PAC and LTC providers have always informally worked together. Now they are joining forces to ensure seamless care transitions, enhance quality and improve outcomes, while protecting their own financial futures.

In this new environment, acute care providers must recognize the importance of PAC and LTC providers in supporting patients post discharge—and lowering readmission rates and emergency room usage. PAC and LTC providers also must realize their own critical role in the care continuum, and adapt administratively, clinically, structurally and financially to the rapidly changing healthcare landscape.

Stephanie Anthony, J.D., M.P.H., is a director of Manatt Health Solutions, the interdisciplinary healthcare policy and strategic advisory practice of Manatt, Phelps & Phillips, LLP. With more than 17 years of experience providing health policy and health law research, analysis and guidance to public and private sector clients, her areas of focus include state and national healthcare reform, post-acute care and long-term services and supports, Medicaid and Children’s Health Insurance Program financing and waivers, and coverage options for the uninsured.