Bundled Payment Deals Prompt Hospitals to Rethink Relationships with SNFs

A survey finds that hospitals are trying different ways to keep the high cost of skilled nursing facility care from eating up their fixed payments for joint-replacement procedures

Aug. 14—Hospital and health system CFOs who are trying to make bundled payments work may find an answer in closer clinical alignment with skilled nursing facilities (SNFs), according to a new study.

A survey of 22 hospitals and health systems that accepted bundled payments from Medicare for joint replacement procedures found that 15 created their own preferred networks for SNFs. Even the seven organizations that didn’t create preferred SNF networks took steps to closely integrate their care with the care provided to their patients by the SNFs in their markets.

“Hospitals that participate in bundled payment episodes for lower extremity joint replacement are attempting to reduce their overall use of skilled nursing facilities, while also strengthening care coordination with the facilities—with and without the use of preferred networks,” concluded the researchers who conducted the survey.

The researchers, from the Perelman School of Medicine at the University of Pennsylvania, published the results of their survey in the August issue of Health Affairs. 

About the Survey

To find out how bundled payment deals affected the relationship between acute and post-acute providers, the researchers surveyed 22 hospitals and health systems that participated in one or both of Medicare’s bundled-payment programs in 2017. Those programs are the Bundled Payments for Care Improvement (BPCI) initiative and the Comprehensive Care for Joint Replacement (CJR) model. 

Located in 10 states, the hospitals and health systems received fixed fees for lower-extremity joint-replacement episodes of care. That meant providers were responsible for the cost of end-to-end care for patients who had their hips and knees replaced. Episode costs spanned preoperative care, surgical procedures, postsurgical care, and rehabilitation.

The telephone surveys conducted by the researchers queried chief medical officers, post-acute care directors, physician administrators, and other operations executives at the hospitals and health systems about their use of SNF services for patients covered under the BPCI and CJR programs.

Seeking Control

Fifteen of the 22 hospitals and health systems formed their own preferred SNF networks to exert more control over the quality and cost of SNF care that was provided to their joint-replacement patients. Nine of the 15 had 10 or more SNFs in their networks. 

Five of the seven hospitals and health systems that didn’t form a preferred SNF network operated their own SNFs and attempted to improve care coordination between their own sites of care.

Of the 22 hospitals and health systems, most took steps to better integrate the acute and post-acute care of patients covered by the bundled payment arrangements. For example:

• 20 collected data from SNFs and monitored their performance
• 19 held regular meetings with SNF leaders
• 17 dedicated care coordinators to SNFs
• 15 shared patients’ electronic health records with SNFs
• 12 embedded their own physicians or other caregivers at SNFs

Further, all of the hospitals and health systems beefed up their home-care capabilities to be able to send patients home directly after surgery rather than to an SNF.  

“To support patients being discharged to home, some hospitals identified social barriers to care and preemptively made referrals for in-home support services such as meal preparation and medication reminders,” the researchers wrote. “A few hospitals reported using community health workers and developing partnerships with community-based organizations.” 

In sum, the hospitals and health systems were trying a variety of methods to avoid referring patients to SNFs, and when they did, to do whatever they could to make SNF care as effective as possible from both a quality and cost standpoint.

Asked whether the survey results would encourage or discourage participation by hospitals and health in bundled payment arrangements, Jane Zhu, MD, lead author of the study, said, “It depends.” Zhu is a National Clinician Scholar and fellow in the Division of General Internal Medicine at Perelman. 

“The jury is still out on whether these different interventions reduce costs or improve outcomes,” she said. “These are very time- and effort-consuming processes. I think most hospitals and health systems are waiting to see which ones the evidence shows are most effective.”

In theory, the interventions by the hospitals and health systems should work to improve outcomes and reduce costs, according to Zhu. For example, sending a knee-replacement patient home rather than to an SNF should reduce costs because home care is a lower-cost care setting. Patients who go directly home also may have less of a chance to develop a healthcare-acquired condition like an infection than they would in an SNF or other facility setting.

Preferred SNF Networks Pay Dividends

Separately, a previous study in Health Affairs reported that hospitals with preferred SNF networks benefited from faster declines in readmission rates. 

In that study, researchers from Columbia and Brown universities compared readmission rates of 16 hospitals in eight U.S. markets. Four hospitals in two markets had built formal networks of preferred SNFs to which they steered patients who needed long-term care. Twelve hospitals in six markets had no preferred SNF network, leaving the choice of SNFs largely to patients and physicians.

In 2009, the hospitals with preferred networks discharged 33.1 percent of patients to a SNF, and 23.8 percent of those patients were readmitted to the hospitals within 30 days. By 2013, the readmission rate dropped to 17.7 percent. The hospitals without networks discharged 23.9 percent of patients to a SNF in 2009, and 21.5 percent were readmitted. By 2013, their readmission rate dipped to 19.9 percent.

The study credited the faster decline in readmission rates to enhanced care coordination and to the use of data to measure the clinical performance of SNFs in preferred networks.

Ultimately the ongoing research on care coordination between acute- and post-acute providers will reveal which tactics generate the most value for providers, patients, and payers, Zhu said. That will give hospital and health system CFOs multiple pathways to making bundled payment schemes work financially for their organizations.

David Burda is a veteran healthcare business reporter. Follow him on Twitter: @DavidRBurda