Achieving meaningful ROI by reducing rehospitalizations

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Phil McNulty, ProConnections
Phil McNulty, ProConnections

Long-term care facilities are tasked with the often daunting challenge of providing the highest quality of care for patients while facing mounting oversight, increased quality mandates and potential reimbursement adjustments which can significantly impact a facility's viability.

Hospital readmissions are one of the major factors which can affect a long-term care or skilled nursing facility's bottom line. For medical care providers within these facilities, reducing readmissions has long gone hand in hand with their goal of providing quality care and preserving their patients' well-being. However, beyond increasing the potential of infection, polypharmacy, and discomfort and stress for the resident and family, unnecessary readmissions can also be financially detrimental to a facility.

That's why new approaches are needed to help SNFs and LTCs reduce the risk of penalties. The use of a telemedicine system not only opens dialogue between healthcare professionals at different facilities, but also allows an offsite physician to more rapidly access and diagnose the patient and recommend treatment based on a first-hand evaluation, offering an even greater level of patient care. With these benefits in mind, telemedicine is becoming increasingly important for SNFs and LTCs facing a wave of new penalties stemming from changing rules governing patient readmissions.

How the ACA is changing the readmissions landscape

Historically, LTC facilities have recorded a re-hospitalization rate of up to 25% within the first 30 days of a patient being initially discharged from the hospital, according to research conducted by the Administration on Aging. This results in significant lost bed days and revenue. A 2014 Cost of Care survey conducted by Genworth Financial, Inc. found the national average cost of private rooms in 2014 was $240, and semi-private rooms were $212. The national average rate of empty beds based on the total number of facility residents and certified beds has been slowly but steadily on the rise, increasing 2.5% (from 14.5% to 17%) between 2005 and 2012, per the Centers for Medicare & Medicaid Services.  

Additionally, due to pending changes taking place under the Affordable Care Act, readmission rates also will potentially impact Medicare reimbursements for LTC and SNFs. The effect of The Protecting Access to Medicare Act of 2014 stems from changes in quality measurements implemented under the ACA, which generated guidance stating that readmission rates will potentially impact Medicare reimbursements to hospitals. While this drive to reduce readmissions was initially aimed at hospitals, other types of facilities now find themselves under the same pressure to provide better post-acute care as well as identifying new services that ensure continuity of high-quality care once the patient has been declared physically ready for discharge.

If SNFs do not adequately prepare patients for discharge and subsequently see that patient readmitted, penalties could cost a given nursing facility up to 3% of its Medicare reimbursements. An incentive pool for high-performing skilled nursing facilities has been created, leveraging a rating system that measures a LTC's performance preventing unnecessary hospital readmissions within a specified amount of time. 

By 2017, PAMA will require each facility to report their readmission rates on Medicare's Nursing Home Compare database and HHS will establish a performance standard, along with levels of achievement, to develop a scoring methodology that helps develop a SNF ranking system. Medicare reimbursement rates for LTCs and SNFs will be partially based on these performance scores.

HHS will establish performance standards tracking the levels of achievement and improvement. Operators will be scored on these standards and be ranked accordingly every year, and Medicare reimbursement rates will be based in part on this ranking. Effectively, SNFs with higher rankings will receive the highest incentive payments and the lower ranking facilities will be reimbursed even less than prior to the new standards and rankings. This can have a profound impact on a facility's fiscal health, placing new urgency on adopting solutions that enhance collaboration among care teams with the shared goal of reducing avoidable readmissions.

Beginning in 2018, long-term care facilities will have Medicare reimbursements linked to their own readmissions rates. The focus of this law will be “potentially preventable” readmissions, which demand that SNFs understand what qualifies under this definition and then develop a plan for reducing the potential of these types of readmissions from occurring.

So what can long-term care and skilled nursing facilities do to reduce these unnecessary readmissions, which not only jeopardize their patients' well-being, but also increasingly threaten their financial performance? 

Fortunately these re-hospitalizations are often precautionary, resulting from a lack of access to on-site physicians and specialists after hours which leads to uninformed decisions on whether hospitalization is truly necessary.

Using telehealth to make informed decisions

The How-to Guide for Improving Transitions from the Hospital to Community Settings to Reduce Avoidable Rehospitalizations recommends key changes which include making a plan for timely consult when a resident's condition changes. It further notes “Timely access to providers who know the resident well and can respond appropriately to changes in the resident's condition is a challenge for most SNFs. This lack of access to providers often leads to reliance on the emergency department for further assessment and immediate care to the resident, which often ultimately results in admission to the hospital.”    

Telehealth technology is gaining momentum as a way to improve efficiencies, reduce costs, and  maintain high quality care. Telemedicine can bring medical examinations, diagnosis and treatment services to a patient over a network, from the comfort of their home facility. To understand the potential ROI telemedicine can drive, it's important for institutions to shift their focus from improving incoming cash to reducing unnecessary care and avoiding penalties. Telemedicine consultations can potentially reduce readmissions and foster greater collaboration between hospitals and supporting facilities, and as a result of enabling timely access to hospital physician and staff, a patient's condition can be assessed more accurately the appropriate level of care identified – often eliminating the need for trips to the ER.

While the early days of telehealth may have limited such technology to large, multi-site hospitals, innovative audio/visual technology providers are now emerging which allow facilities of all sizes, locations and deployment scopes to find solutions that are right-sized for their unique needs and budgets. By allowing LTCs and SNFs to customize telehealth solutions that directly address the specific services they require, telemedicine is becoming more accessible and affordable. Even rural facilities can achieve an expedient return on their investment by potentially reducing unnecessary readmissions and supporting the highest level of care possible.

Ultimately, the use of a telemedicine system within an LTC or SNF not only opens up the door to a more coordinated dialogue between healthcare professionals at different facilities, but also allows an offsite physician to more rapidly access and diagnose the patient and recommend treatment based on a first-hand evaluation, offering a superior grade of patient care. With today's demanding reimbursement policies and the costs of sending a patient off-site challenging healthcare organizations to evolve, telehealth technology may be the key to minimizing CMS penalties and the lost revenue of an empty bed.

Phil McNulty is a co-founder of ProConnections Inc., a provider of proven, simple-to-use telemedicine solutions purpose-built for healthcare services. He currently serves as the Chief Operating Officer and Chief Financial Officer. 

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