Reg's Blog

Senior and Post-Acute Healthcare News and Topics

What’s Trending: Back on Track….For Now

Finally, my plans and I collide again on a Friday afternoon and I’m somewhat back on schedule … for now.  With forecasted travel next week plus a touch of R&R time, it looks like I’ll be back off-track before long.  We’ll see.  Not a lot different on my dashboard as this week concludes.  I’m pretty much awash in health policy “what if” issues as of late so my trends at this mid-August point follow this theme.

The Great Medicare Debate and the Reality of it All: One week post, not quite, of the Romney selection of Paul Ryan as his running mate and the proverbial Medicare fur is flying.  The back-and-forth accusations of which party cut (or would cut) Medicare most, change the program, alter coverage for the poor, etc. is both fascinating and nauseating at the same time.  The reality of this discussion is not available via the words and rhetoric but in the economic outlook for Medicare and Medicaid.  Both programs are enormous and structurally unsound.  Both are unsustainable without ramping deficit levels.  Both need significant reform at all levels and with a larger vision than either party wishes to admit.  The real validation this week came from Moody’s Investor Service.  Moody’s issued a negative outlook for non-profit hospitals this week stating, “The economic recovery will remain tepid, the transition to new payment methodologies will require significant investment, revenue growth will remain low by historical standards, and reimbursement will remain under pressure from all sources.”  Their negative outlook focused on the funding questions for Medicare and Medicaid combined with the Washington stalemate on health care reform and policy decisions tied to spending, taxation, etc.  My trend to watch has little to do with the election rhetoric and more to do with how everyday life responds to the debate and the questions that are looming and unanswered.

Medicaid and State Elections: Kaiser’s on it (see ) and I’ve talked at length about the real impact of the Supreme Court decision regarding Medicaid expansion not being fully visible until later this year.  If this fall, more statehouses shift to Republican control, it is likely more states will pass on Medicaid expansion.  Is it possible that more than a dozen states opt out?  The more that do, the more pressure for Medicaid programmatic change will roll to Washington. A potential, and today that is all it is, Republican coup from Washington through double-digit state capitols and legislatures could create a literal tsunami of death for Medicaid expansion, even if repeal of the ACA is not in the cards as a result of no real numbers changes in the Senate. Predictably, I am forecasting that Medicaid not Medicare, will be the first substantive and large-scale change post ACA passage and not in the way spelled-out in the ACA.

Hospitals and Readmissions: October 1 is fast-approaching and thus, the roll-out of penalties via reduced Medicare payments for certain “avoidable” readmissions. The focus of the October 1 penalty period is the rate of readmissions (within 30 days of inpatient discharge) from the three-year period between July 2008 and June 2011.  Applicable diagnoses are heart failure,  heart attack and pneumonia. Starting October 1, we already know of more than 2,000 hospitals that face reduced Medicare payments (up to 1% of base Medicare) as a result of higher readmission rates.  Nationally, the average readmission rate has held around 19%, equating to 2 million Medicare beneficiaries costing Medicare $17.5 billion in additional spending (per CMS). Starting next year (begins October 2013), penalties rise to 2% and then in the following year to 3%.  According to CMS, of the 2,200 hospitals presently in queue for penalties, 1,900 will receive less than the 1% maximum.  From all indications, the hospitals hit hardest serve a disproportionate share of at-risk elderly and patients that comprise the lowest (or near lowest) SES (Socio-Economic Status).  These hospitals tend to be more urban, more teaching oriented, and more Level 1 centers than others.  My trend to watch is now that the penalties are known, applicable to which hospitals and the data available, is what behavior changes will occur at the hospital end and in addition, what post-acute providers shift to position themselves as possible solutions to this problem. Anyone interested in knowing the penalty applicable to a particular hospital, drop me a note at or coment on this post. I have the full list from CMS.

Finally, a bunch of Fall Out issues this week (worth noting but not necessarily worth continued watching).

  • According to study completed by the Commonwealth Fund, the vast majority of hospitals are not seeking to develop an ACO (Accountable Care Organization).  The primary barrier in considering whether to participate or not is the willingness to accept financial risk.  Those that have jumped-in were driven primarily by physician leadership and engagement.
  • According to polls conducted by the Kaiser Health Foundation and the Washington Post, a majority of Republicans and Democrats oppose cuts to Medicare benefits or transitioning the program to a voucher type system. I do love polls! Makes one wonder what the poll would look like if the majority of Americans preferred a different system?  Do the Lemmings always march to the cliff at the sea?
  • In a report to Congress, CMS indicated that first year results were mixed  in the SNF pay-for-performance pilot; a three-year demonstration program.  The program’s goal is to reward via increased payments, SNFs that reduce hospitalizations and exhibit high clinical quality measures.  The pilot includes over 180 nursing homes in Wisconsin, New York and Arizona.  Per CMS, one of my favorite states did very well.  Congratulations Wisconsin!
  • One last political bit…and a definite fall-out issue..  Paul Ryan is everywhere on the news and the Medicare reform/restructure debate is hot and getting hotter.  I know it’s easier to listen to the media coverage than to dig through the numbers but I urge readers because of the magnitude of the health care decisions facing us now and going forward, to read the related CBO reports and the pieces produced by Paul Ryan regarding his approach to entitlement reform.  I for one, am not going to tell anyone how to vote but I certainly urge everyone to understand both sides of the issues and to get the “facts” before deciding which “tailored” news report or interview to put stock in.  Enough said – for now.

August 17, 2012 - Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , ,

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