Post Acute Network
Development in the Era
of Healthcare Reform
RCPA Annual Conference
October, 2014
Michael J. Soisson, MS, MHA
Senior Vice President, Vibra Healthcare
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Agenda
 Post Acute Care: Definition
 Post Acute Care History and Evolution
 Regulatory and Financial Environment
 Post Acute Partnerships
 Demonstrating Value
 Keys to Success
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Post Acute Definition
LTACH
IRF
Medical
SNF
HHA
Hospice
LTC
CCRC
Residential
Asst Living
Indep. Living
Group Home
Home
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Post Acute Care (PAC)
by the Numbers
PAC
20-25% of the total medical expense
for a Medicare beneficiary. PAC
spending, with annual growth in the
last decade outpacing other service
categories by 50% or more, now
accounts for a significant portion of
overall Medicare expenditures.
$65 Billion
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25%
Post Acute Care (PAC)
by the Numbers
Up to
40%
CMS Believes
• Over-utilization of
SNF days
• 25% of SNF admits
could go home
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$10
Billion
• Amount Saved by
Medicare annually if
patients utilize the
appropriate PAC
setting
Over
8%
• The rate at which
Medicare spending for
SNF, LTC, and Home
Health grew annually
from 2001-2012
Post Acute Care (PAC)
by the Numbers
Percent spending by
Medicare on Post Acute
IRF
11%
LTACH
8%
$13.1 billion
SNF
50%
HHA
31%
$4.5 billion
Medicare PAC
Spending 2012
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$8 billion
Medicare’s
Annual
Post-acute
Expenditures:
$65 billion
CMS Spending
 In 2010, 57% of all spending was on 10% of the
enrollees
 82% of all spending was on the top 25% of the
enrollees
 27.3% of the enrollees were in the 75 – 84 age group
but this group accounts for 32.1% of the cost.
 And Enrollment in Medicare is going to EXPLODE
 47.4 million enrollees in 2010
 63.9 million by 2020 (35% increase)
 And Medicaid grow is projected at 20%
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Financial/Reimbursement
 Historical Payment (HCFA – CMS)
 TEFRA
 PPS
This model promotes silos of care
 Today




LTACH
IRF
SNF
HHA
$40,000/case
$14,500/case
$450 per day ($10,000 per case)
$2800 per episode of care (60 days)
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Current Regulatory Environment
 LTACH
Revised Patient admission criteria (2015)
 IRF
Presumptive compliance change (2015)
 SNF
Readmission Penalties
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Acute Care Hospitals
 Value Based Purchasing (quality metrics)
 Readmission Penalties
 Penalties for poor outcomes/hospital
acquired conditions
 Reduced/elimination of DSH payments
 Physician shortage and employment wars
 Pressure to merge/acquire or be acquired
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Post Acute Need
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Post Acute Partnership Evolution
 Phase I
Build it and they will come
 Phase II
Preferred Providers
 Phase III
Hospital within Hospital
 Phase IV
Joint Venture Facilities
 Phase V
Post Acute Networks
 Future
Shared Risk/Reward
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The Future Is Now
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ACA = ACO
 338 Medicare Shared Savings ACO’s (end of 2013)
 4.9 million assigned beneficiaries in 47 states
 In 2014 15.4 Million Medicare enrollees shifted to
Medicare Advantage plans
 20 Million Medicare Enrollees are now in some kind of
“managed” plan
 Managed Medicare is very different from managed
commercial (healthy) care
 Medicare patients = managing chronic disease
 Chronic disease management = post acute need
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Post Acute Projects (CMS)
 Bundled Payments
 Model 2
 Hospital + MD + Post Acute Provider + readmissions
 Model 3
 Post Acute Provider + readmissions
 Medicare CARE Tool
 Common Assessment Tool for Post Acute
 IMPACT Legislation
 Coordination of Standardized Post Acute data
 Requirement of a Standardized Assessment Tool
 Define Reporting Provisions and Quality measures
 Define Post Acute Payment Systems
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STAC Hospital Choices
 Develop their own Post Acute Continuum and prepare
to go at risk
 Partner with Post Acute Providers who would manage
the Post Acute Process and go at risk
 Preferred Provider Agreements
 Joint Ventures (Shared risk/reward)
 Partner with Payer Sponsored ACO’s and let them
manage the care
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Post Acute Provider Options
 Do Nothing and hope to be included in all equations
 Establish Preferred Provider affiliations with STACH and growing
local ACO’s
 Be proactive and present Post Acute Management to STACHs and
ACOs.
 Options
 Bundled Payment (part of Model 2 with STACH)
 Bundled Payment (Model 3 Just for Post Acute)
 Case Rate for ALL post acute service including home
 Capitation for all post acute service
 CREATING VALUE WILL BE KEY TO SUCCESS
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PAC Value Calculation
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Post Acute Partnership:
Value
 Shorten LOS
 Reduced Costs
 Improve patient throughput
 Reduce Readmissions
 Keep patients within the system
 Manage chronic disease
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LOS Impact Analysis
LOS Impact
Total Patients LOS > 6 & GMLOS
Total Excess Days
Variable Cost Per Excess Day
Total Savings Potential
25% Capture
1,016
5,755
$600
$3,453,000
$863,250
Reducing LOS reduces census.
Cost savings are on variable cost and
requires actual reduction in staff/supplies;
etc to achieve savings
New Patient Replacement
Total Patients LOS > 6 & GMLOS
Total Excess Days
ADC of Excess Days
Replacement Patients
Net Rev per Admission
Total New Revenue
1,016
5,755
15.8
1151
$6,500
$7,481,500
New Patient replacement assumes additional
patients are available to fill beds that are open
due to reduced LOS. (Estimate 1151 new
patients (at ALOS of 5 days)
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Reduce Readmission Impact
ACO
Total MC & MA Discharges
Total PAC Discharges
% MC & MA Discharged from IP to PAC
# Touched per Month
35,900
16,000
44%
1334
% Readmitted from PAC
16%
# Readmitted from PAC
2560
$ Saved by Readmission Avoidance of 1%
(ACO savings potential)
$24,000 per case, savings
$3.8 mil 1% savings
Reduced Readmission
(STACH Impact)
 Medicare Discharges
11,189
 Total Medicare Payment
$77,204,832
 Payment at Risk (3%)
$2,316,145
 Readmissions previous Year
1,902 (17%)
 Readmission Penalty per discharge
$1,218
 Readmission Savings if reduce 1%
$135,744
1% Reduction in readmissions = 1702 v 1902. 112 fewer readmissions @ $1,218 penalty per readmission = $135,744
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Keys to Success
 Shared Goals/Shared Philosophy
 Clinical Information;- at the patient level
 Understanding cost;- at the facility level and at the
patient level
 Control (or at least a seat at the table) of Acute Care
Discharge Planning Process
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Today
 STAC Hospital is paid on per discharge basis
 +/- $6,000 per case regardless of LOS (until cost outlier)
 Penalized for readmission within 30 days
 Incentive is to discharge the patient (ANYWHERE) as
quickly as possible while avoiding 30 day readmission
 Discharge to home if possible and manage there or
discharge to Post Acute Facilities that can best manage
patient and not readmit
Example: If patient can be discharged in 4 days, hospital receives $6,000 payment
($1,500 per day) vs discharged in 6 days or $1,000 per day
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Future
Under a managed care, per member per month, or in the ACO model
 If paid per member per month basis:
 Incentive is to:
1. Avoid acute care admissions if possible

Only critically ill patients will be admitted
2. If admitted, shortest LOS possible (again, avoiding
readmissions) and ideally, discharged HOME.
3. If not home, discharge (as quickly as possible) to the Post Acute
Bed that is the BEST VALUE
 Discharge to facility that will get the patient home and keep them
home as quickly and as low cost as possible
 Key to success will be MANAGING the Care
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Some Examples for the Future
 SNF @ $600 per day
and it takes 20 days to
get the patient home
($12,000)
 Average SNF
discharge to home =
35%
 Average SNF
readmission rate is
30%
 IRF @ $13,000 per
case (ave for
orthopedic case) with
ALOS of 12 days
 Average IRF discharge
to home = 75%
 Readmission Rates for
IRF nationally are <
10%
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Future
(Catastrophic Cases in Acute)
 Patients on Vents for longer time or in the ICU,
consider:
 LTCH
 ICU cost is $3,000 per day v LTCH at $1,800 per day for a
ventilator dependent patient
 Goal would be to keep moving patient to lower cost
service that will get and keep the patient home
 LTCH, IRF, SNF, Home
Example:
Ventilator Patient in an ICU
Service
LOS
cost/day Total cost
ICU
20
$3,000 $60,000
SNF
20
$600 $12,000
Total
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$72,000
Ventilator Patient transitioned from ICU
Service
LOS
cost/day Total cost
ICU
6
$3,000 $18,000
LTCH
21
$1,800 $37,800
IRF
12
$1,000 $12,000
Total
39
$67,800
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Post Acute Definition
LTACH
IRF
Medical
SNF
HHA
Hospice
LTC
CCRC
Residential
Asst Living
Indep. Living
Group Home
Home
Ultimately: Case Rate of $___ from STACH D/C to 90 days at Home
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The Future Is Now
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The Future is Now?
 Bundled Payment for Post Acute Care By Diagnostic
(chronic) condition
 Part of a Bundled Payment for Diagnostic Condition
with STACH from admission to home
 Case Rate for ALL post acute care by Diagnostic
Condition
 Capitation for all care?
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Mike Soisson
SVP Vibra Healthcare
msoisson@vibrahealth.com
717-798-1278
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