Blog Post | May 4, 2017

Community-Based Care Model Helps Reduce Rehospitalization for Medicare Beneficiaries

Audrey is an 82-year-old is a Medicare beneficiary who lives alone at home with advanced chronic obstructive pulmonary disease (COPD). Her healthcare providers are participating in Model 2 Bundle Payment for Care Improvement (BPCI), a retrospective payment arrangement with CMS in which actual expenditures are reconciled against a target price for an episode of care. An episode of care includes an inpatient stay in an acute care hospital plus post-acute care and all related services up to 90 days after hospital discharge.

Cyndi Seiwert Turn-Key Health COO

Cyndi Seiwert
Chief Operating Officer
Turn-Key Health

Audrey was recently admitted to the hospital for treatment of COPD exacerbation and pneumonia, a clinical episode included in her providers BPCI arrangement. She was discharged home after 10 days.  Under the BPCI arrangement, her provider must help manage her care for an additional 80 days, including managing her post-acute care needs.

Two key challenges facing providers who participate in the BPCI program include preventing related rehospitalizations and managing post-acute care services after an acute-care discharge for an episode of care.

Although a discharge from acute care directly to the community is the lowest cost pathway, discharge to the community followed by a readmission is the highest.[1] Most hospital readmissions occur within the first 15 days after admission. Currently, for the most frequently treated conditions in U.S. hospitals, at least one in five cases results in a readmission within 30 days. Conditions with the highest rate of readmission include congestive heart failure (24.7 percent), acute and unspecified renal failure (21.7 percent) and chronic obstructive pulmonary disease (20.9 percent).[2]

Medicare and Medicaid patients with diagnoses associated with large numbers of stays and high readmission rates are more likely to be readmitted than privately insured or uninsured patients. For example, congestive heart failure readmission rates were 30.1 percent for Medicaid, 25.0 percent for Medicare, 19.5 percent for privately insured, and 17.1 for uninsured patients.[3]

To make a direct impact on episode costs and readmissions and to be successful in BPCI arrangements, acute care hospitals must find ways to improve their discharge planning process and the effectiveness of their post acute care network.

The bundled payment program puts acute care hospitals in a position of greater financial and performance accountability, making it critical for them to find innovative business and clinical models, and form strong networks with other providers. Aligned post-acute care partnerships are the key to developing and implementing effective population health programs and clinical practice systems.

Reducing Costs and Improving Care

The most significant opportunities for reducing spending and improving quality generally occur after patients are discharged from the hospital. Post-acute care is a major component of total per-episode spending. For example, post-acute care and readmissions account for nearly 40 percent of Medicare spending for 30-day chronic heart failure episodes and 37 percent of spending for joint replacement episodes.[4] These proportions increase for longer episodes.

Post-acute care spending varies greatly from provider to provider and across geographic markets. A recent Institute of Medicine study found that post-acute care was the single largest factor driving geographic variation in Medicare per-beneficiary spending.

To avoid hospital readmissions and improve post acute care outcomes, BPCI programs should recognize the unique needs of their population and deliver a program that best meets their needs. Among those at highest risk to be hospitalized and require post acute care are persons with serious illness. Patients like Audrey require specialized palliative services that include symptom review, medication management, and discussion of personal goals of care that is missing from traditional models.

Turn-Key Health launched an innovative program called Palliative Illness Management ™ – PIM ™ that taps into the resources of existing dedicated community-based palliative care teams to provide specialty level palliative case management services. A pilot program for seniors enrolled in a Medicare Advantage plan reduced hospital readmissions 61% compared to non-enrolled members and reduced hospitalizations 32%.

Given its effectiveness, a growing number of providers are beginning to see the value of expanding the role of PIM in care coordination to improve the predictability of quality and costs for patients enrolled in BPCI programs.

[1] Mechanic, Robert; Medicare’s Bundled Payment Initiatives: Considerations for Providers; American Hospital Association; Jan. 19, 2016;; accessed April 26, 2017.

[2] Elixhauser, Anne Ph.D. and Steiner, Claudia, M.D., M.P.H.; Readmissions to U.S. Hospitals by Diagnosis, 2010; Agency for Healthcare Quality and Research; April 2013;; accessed April 26, 2017.

[3] Elixhauser, 2013.

[4] Mechanic, 2016.

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