Blueprint for Post-Acute

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1 Blueprint for Post-Acute Care Reform Post-acute care is a critical component within our nation s healthcare system and an essential aspect of care for many patients making a full recovery possible after an illness or injury. However, policymakers, providers and payors alike recognize that the current silo-based postacute delivery and payment systems are unsustainable for the long term. In order to play a positive role in advancing the discussion surrounding post-acute reform, Kindred appreciated the recent opportunity to submit our Roadmap for Post-Acute Reform to the leadership of the Senate Finance and House Ways & Means committees. We believe that we can provide constructive input and feedback based on valuable lessons in our efforts to transform our own service delivery model to provide integrated, patient-centered care across the post-acute continuum to support new payment models based on value, not volume. Challenges Facing Post Acute Care We recognize that significant improvements are needed to the current post-acute payment and delivery system, including: The silo-based fee-for-service payment system is not patient centered, rewards volume and not value, and does very little to promote integrated care. Today, providers are actually penalized for positive outcomes such as reduced lengths of stay, and many fee-forservice regulations actually impede integrated patient care. There is a lack of clarity around which patients are appropriate for each post-acute care setting and, equally important, how long patients should stay in each setting before it is clinically appropriate to transition to different sites of care. The current system will not keep up with the demand for postacute services, given the aging demographics of our population and the incidence of chronic disease. Growth in spending as the population ages, and variation in postacute spending throughout the country, is unsustainable. Defining Post-Acute Care (PAC) Post-acute care is important in effectively managing a patient s recovery during an episode of care and is delivered in a variety of settings including: long-term acute care hospitals (LTACHs), inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs), assisted living facilities (ALFs), home health agencies (HHAs), hospice, and with outpatient rehabilitative therapies. Kindred Across the Continuum Kindred is the largest provider of diversified care across the full post-acute continuum, with: 504,000 post-acute care patients treated each year; 2,265 post-acute service settings in 46 states nationwide; and The full range of post-acute services provided through the following care settings: 102 Transitional Care Hospitals (LTCHs) 108 Hospital-based and Freestanding Inpatient Rehabilitation Facilities (IRFs) 21 Sub-acute units 102 Skilled Nursing and Rehabilitation Facilities (SNFs) six Assisted Living Communities (ALs) 1,732 Rehabilitation sites providing inpatient and outpatient rehabilitative care 200 Home Health and Hospice locations 1 Dedicated to Hope, Healing and Recovery

2 To address these challenges, we propose key principles that enable a reformed post-acute care payment and delivery system to promote recovery and wellness for a growing population of people needing post-acute services in the most efficient setting. The primary goal of a new system should be to return patients home as soon as possible while at the same time providing care and services that will keep people at home by avoiding hospitalizations. In order to achieve this goal, a new system must be patient centered and promote integrated care across a continuum, where providers and payers have aligned incentives to work together to determine the most appropriate and cost-effective settings of care, smooth transitions between settings, evaluate how long care should be delivered in each setting, and ensure high quality as measured by common metrics across an episode. Principles for Reform 1. Recognize That Each Post-Acute Provider Offers Unique Value and Plays an Important Role. Policymakers should recognize each post acute provider offers unique value through the medical care and rehabilitation services provided in different settings. Clearly, any reform scenario must retain the value of clinical and condition-specific programs provided by each post-acute care provider and avoid dramatic policy shifts that cause dislocation and jeopardize patient care. 2. Prioritize Policies in the Near Term That Simultaneously Support Integrated Care and Achieve Budget Savings. It should be recognized that some growth in postacute spending may contribute to reductions in overall healthcare spending when less expensive post-acute services can substitute for more expensive inpatient care. Payment cuts alone are not the answer. In the wake of Sequestration and other rate cuts, payment reductions solely to produce budget savings are shortsighted, will cause significant dislocation for providers and patients, and will actually thwart movement toward progressive reform by preventing necessary investments in integrated care. Instead, we urge policymakers to prioritize those policies that achieve both budget savings and build a bridge to a reformed post-acute care delivery and payment system. 3. Remove Barriers to Integrated Care by Modifying or Eliminating Fee-for-Service Rules That Thwart Innovation and Reform. As integrated care delivery and payment systems to support post-acute care reform will take time to develop, the current Fee-for-Service (FFS) must remain in place during an appropriate transition period. But there are short-term improvements to FFS to promote the types of integrated care that the future system will require for patients, payers and providers. Some of the FFS rules that serve to raise costs, thwart innovation, and inhibit movement towards integrated care and integrated payment could immediately be eliminated including: Remove restrictions on co-location of PAC provider types; Eliminate the three-day hospital stay requirement for SNF care; Eliminate the 25-day Length of Stay Requirement for Medicare Advantage patients treated in LTCHs; and Eliminate restrictions on information sharing between institutional PAC providers and Home Health providers. 4. Support Innovation and Build a Bridge to the Future Through Incremental Reform. Public and private sector entities are actively engaged in a variety of activities that are testing approaches to integrated care and integrated payment that will serve as important building blocks for post-acute reform. While initiatives such as post-acute bundled payments hold great promise, they should proceed incrementally so that we all may understand the potential as well as how to avoid pitfalls in guiding sustainable, long-term post-acute care reform. 2

3 Kindred s Experience in Providing Integrated Post Acute Care Kindred has been investing in the capabilities necessary to meet the needs of patients throughout an entire episode of post-acute care and to pursue innovations in care that address the shortcomings of the current silo-based system. We urge policymakers to examine these experiences closely to guide reform efforts. We have set out to build the capabilities to deliver integrated post-acute care in local Integrated Care Markets throughout the country, as depicted in the map below. We are implementing a three-step approach to build out these capabilities: Step One: Develop the full continuum of post acute services in local health care delivery markets; Step Two: Provide care management services to patients throughout an entire post-acute episode of care; and Step Three: Test and implement pay for value and risk-based payment models Kindred s Integrated Care Market Strategy Is a Step-Wise Approach Designed to Prepare for a Delivery System That Is More Clinically Integrated with Shared Financial Incentives Expected Outcomes: Improved Quality and Patient Satisfaction Reducing Hospital Readmissions Lower Cost for an Episode of Care Kindred Risk HIGH LOW Level of Care PPD Today Near-Term Future Medicare- Based Rates Pay for Performance with Bonus Payments and Penalties Financial Alignment Gain Share with Partial and/or Shared Risk for Post-Acute Episode Shared Risk for Post-Acute Episode HIGH Transitional Care Hospitals (102) Inpatient Rehabilitation Hospitals (5) Hospital-Based Acute Rehab Units (103) Nursing and Rehabilitation Centers (102) RehabCare Total Sites of Service (1,732) Home Health, Hospice and Private Duty in 15 Integrated Care Markets (200) Regional Support Centers Kindred Healthcare, Inc LOCAL KINDRED MARKETS with A DEVELOPING continuum of post-acute services AND active integrated care partnerships 3

4 Kindred s Patient Centered Care Management Model While current payment systems do not reward integrated care, Kindred has developed a patient-centered care management model that seeks to provide integrated care from hospital to home, including the key enablers for effective care coordination and improved outcomes: physician coverage across sites of care, care managers to ensure safe transitions, information sharing and connectivity, mechanisms that aid in appropriate patient placement and to determine the appropriate length of stay, and condition specific clinical programs, pathways and quality measures. Information Sharing and IT Connectivity ACUTE CARE HOSPITAL Physician Coverage Across Sites of Care Care Managers to Smooth Transitions PATIENT-CENTERED CARE MODEL Mechanisms to Make Patient Care Placement Decisions Condition- Specific Clinical Programs, Pathways and Outcome Measures CONTINUE THE CARE HOME Transitional Care Hospitals Inpatient Rehabilitation Hospitals Skilled Nursing and Rehabilitation Centers Outpatient Rehabilitation Assisted Living Homecare Hospice Kindred Healthcare, Inc

5 Health Information Technology Driving Integrated Care The ability to have information for our clinical teams within our care settings and to transmit information across sites of care with our partners is a critical element for effective care management over an episode of care. At Kindred, we have invested millions of dollars in a multi-year plan to install and link electronic health records across our care settings. Concurrently, we are developing a Health Information Exchange [HIE] to facilitate the sharing of electronic patient data between Kindred sites of care and with external healthcare partners. We take this opportunity to remind policymakers that we have made these investments in information technologies even though post acute care providers were not eligible to receive federal funding for Electronic Health Record adoption. Not surprisingly, this lack of funding had the very real impact of significantly lowering EHR adoption rates among post acute providers. This should cause concern because of the recognized importance of communication between acute and post-acute settings, and should be addressed in post acute reform. PHYSICIANS (Primary Care, Attending and Specialist) COMMUNITY HIE Kindred Nursing and Rehabilitation Centers Kindred at Home Kindred Health Information Exchange SHORT-TERM ACUTE CARE HOSPITALS PATIENT CARE SUMMARY Kindred Transitional Care Hospitals RehabCare MANAGED CARE PAYORS CASE MANAGEMENT Learn more about the Health Information Exchange at: Kindred Healthcare, Inc Creating Better Patient Outcomes This integrated care management model has improved patient outcomes and lowered costs in key areas: Reduced Rehospitalizations From 2008 to 2012, hospitalization readmissions from Kindred LTCHs were reduced by more than 8%, and by nearly 12% from Kindred SNFs. Reduced Lengths of Stay From 2008 to 2012, average lengths of stay in Kindred SNFs were reduced by 27%. Increased Discharges to Home Since 2008, Kindred SNFs have discharged 32% more patients home and in 2012, our LTCHs discharged nearly 70% of patients home or to a less intense level of care. Functional Improvement Gains In 2012, Kindred therapists were able to help patients achieve more than 78% improved function and independence from what they were able to do prior to admission. Improvement in Quality Indicators In 2012, Kindred s LTCHs, SNFs, IRFs and homecare locations outperformed national benchmarks in key quality indicators such as line-related blood stream infections in our hospitals, survey quality performance in our nursing and rehabilitation centers, national quality measures in homecare and functional improvement in our inpatient hospital-based rehabilitation units. Improvement in Patient Satisfaction In 2012, more than 92% of patients and families were satisfied with the quality of care provided in Kindred LTCHs. Watch Kelly s inspirational story of recovery at: In pursuing post-acute care reform, we urged policymakers to consider our experiences and challenges in care management across a post-acute episode. Specifically, policymakers should be aware that today the value we create is not recognized by the payment system. In fact, we are penalized by the FFS payment system for achieving outcomes such as reduced lengths of stay. Additionally, the current post-acute payment systems lack incentive to work across post-acute settings to coordinate care, create improved outcomes, or reduce costs. With respect to a reformed system, we encourage policymakers to remove some of these perverse incentives and support a bridge to more integrated delivery and payment systems in the future. 5

6 Framework for Post-Acute Care Reform Reforming our nation s post-acute healthcare system will require teamwork, cooperation and trust between those charged with delivering care, those developing new rules and regulations, and those paying for it. This won t be easy. Despite the challenges, we believe there is a path forward to achieve patient-centered, quality-driven post-acute care that is recognized and rewarded for its value. Based on our significant experience in breaking down the silos of postacute care within our company, we recommend that Congress pursue PAC reform pursuant to a two-phase process: Implementing Phase One A Bridge to the Future Kindred responded directly to requests from the Senate Finance and House Ways & Means committees for stakeholder input regarding specific policies for postacute care reform. These have come in the form of recent proposals tendered by the Medicare Payment Advisory Committee (MedPAC), the Obama Administration, the Bipartisan Policy Center (BPC), and Simpson-Bowles among others. The following chart provides an assessment Phase One: Adopt a Post-Acute Care Reform Framework to Prioritize Interim Policies That Promote Both Integrated Care and Budget Savings. Congress should adopt a framework that enables the evaluation of various postacute care policy options consistent with the aforementioned principles. Specifically, we suggest short-term policies be prioritized and assessed with the following goals in mind: 1. Slows growth in healthcare costs and achieves budget savings; 2. Encourages appropriate patient placement and length of stay in the least costly, most clinically appropriate setting; 3. Facilitates improved care transitions and communication between settings; 4. Encourages quality over an episode of care with consistent metrics that transcend sites of care; 5. Promotes patient responsibility and participation in care; and 6. Supports innovation and testing of new care delivery and payment models. Phase Two: Systematically Pursue Long-Term Post-Acute Care Reform. of various reform options against the six goals articulated above. Congress should prioritize those policies that advance the key elements of post-acute reform, and should reject policies that do not advance rational reform. A comprehensive analysis of each proposal is contained within the exhaustive document submitted to the committees and is available at PAC Hospitals Readmissions Reduction Program LTCH Patient and Facility Criteria Part B Therapy Payment Reform IRF/SNF Payment Equalization Slows Spending Growth and Achieve Budget Savings Encourages Appropriate Patient Placement and Utilization IRF 75% Rule Facilitates Improved Care Transitions Encourages Quality with Consistent Metrics Promotes Patient Responsibility/ Participates in Care Supports Innovation HHA Co-Payment Market Basket Cuts Reduce Reimbursement for Bad Debt Rebase SNF Payments Interim PAC Proposals that should be prioritized Interim PAC Proposals that should be carefully evaluated 6 PAC Proposals that should be rejected

7 Implementing Phase Two Establishing Sustainable Long-Term Post-Acute Reform Long-term PAC reform must be patient centered, promote integrated care, pay for care over a defined episode regardless of setting (as opposed to the current fee-forservice system), pay at levels to ensure quality care, and produce savings to the Medicare program. At Kindred we believe that bundling and other forms of episodic payment for post-acute services hold great promise for sustainable reform. For that reason, Kindred is participating in the Congressionally-mandated, CMS-administered bundling demonstration project, beginning on January 1, We have already made substantial investments to prepare for implementation. Our experiences to date and the experience of others participating in the bundling demonstrations have already yielded important insights that we feel should influence Congress as it pursues comprehensive and long-term post-acute care reform. As Congress seeks to enact reform through post-acute care bundling options and other episodic payment approaches, we caution that this will take time and must be implemented incrementally to increase the probability for success and to avoid unintended consequences. It should be recognized that several recent proposals include PAC bundling provisions that delay implementation until 2018 in recognition that immediate implementation would be inadvisable and unable to attain in the short term. In weighing the components that Congress should evaluate as they strive to create long-term post-acute care payment and system reforms, Kindred s Roadmap for Post- Acute Reform details key considerations for sustainable reform including: The importance of a PAC-only bundled payment system The need for a uniform patient assessment instrument across all settings Facility criteria to ensure appropriate patient placement and quality care Risk adjustment and other payment considerations Development of post-acute quality measurements that transcend sites of care Infrastructure for episodic care management and financial reporting Elimination of Fee-for-Service rules that impeded integrated care for an entire patient episode. These considerations are comprehensively detailed in the document submitted to Congress and is available at: As we detailed in the Roadmap for Post-Acute Reform that we prepared for Congress, Kindred is committed to working with all stakeholders in order to advance progressive post-acute care reform to ensure the delivery of high quality and efficient care that Medicare beneficiaries deserve. 7

8 Dedicated to Hope, Healing and Recovery 680 South Fourth Street Louisville, Kentucky Learn more about patient and employee experiences with Kindred by following us on Facebook, Twitter, LinkedIn and YouTube. COPYRIGHT 2013 Kindred Healthcare Operating, Inc. CSR , EOE

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