Michael Sack, LFACHE

National Health Policy Forum June 5th, 2015

$2 Trillion in Deficit Reduction

The Issues

Differences between hospitals and other

sites— “not all sites are created equal” i.e.

Justifiable cost differences

Data Issues

Fixed costs: Need to fund 24/7 standby capacity;

Disaster readiness

Data Sources: Hospitals submit detailed cost

reports; PFS based on surveys

Sicker, more complex patients, more vulnerable

populations—safety net providers; EMTALA

Rate Comparability, Definition of a unit of service:

Increasing bundling of OPPS payments—e.g. OPPS

E/M Codes collapsed from 10 to 1 ---no more

matching between PFS and OPPS for these

services; increased # of comprehensive APCs

Stricter Licensing, Accreditation, Regulatory

requirements

Unintended consequence of different payment

system methodologies inflation updates, base year

and formulas: e.g. for 200 codes, PFS is higher than

OPPS for the same service; ASC rates based on

OPPS rates

Societal Needs: Teaching function

Special capabilities: Burns, Trauma etc.

Differing levels of care—e.g. IRFs vs SNFs

Additional Policy Impacts to Consider

• Total Medical Expense—MedPAC

measured 30 day spending post

discharge; what about 90 days?

• Risk Adjustment to ensure comparability

• Adverse events other than readmissions

• Discharge planning

• Move to APMs

answering today’s health policy questions

Prepared for:

American Hospital Association

February 2015

Comparison of Care in Hospital Outpatient

Departments and Physician Offices

Final Report

Berna Demiralp, PhD

Delia Belausteguigoitia

Qian Zhang, MA

Lane Koenig, PhD

KNG Health Consulting, LLC

Key Findings: Comparison of Patient Characteristics

Relative to those treated in physician offices, patients

receiving care in HOPDs are more likely to be:

• 1.7x more Black or Hispanic

• 2.5x more Self pay, charity care, or on Medicaid

• From areas with low household income, high rates of

poverty, and low rates of college education

• Burdened with more severe chronic conditions, in terms

of their effect on mortality

• Hospitalized, have an emergency department visit, and

have higher Medicare spending prior to receiving

ambulatory care

9

Key Findings: Comparison of Delivery of Care

Relative to care provided to patients treated in physician

offices, care provided to patients treated in HOPDs is:

• More likely to be delivered to a new patient or referral

• More likely to be for the receipt of treatment

• Likely to include the provision or ordering of more

treatments and services

• More likely to include care from a nurse

10

Our strategy

Key Findings: Comparison of Cancer Patient Characteristics

Relative to those treated in physician offices, patients

receiving cancer care in HOPDs are more likely to be:

• 1.9x Black or Hispanic

• 3.8x Self pay, charity care, or on Medicaid

• From areas with low household income, high rates of

poverty, and low rates of college education

• Burdened with more severe chronic conditions, in terms

of their effect on mortality

• Hospitalized, have an emergency department visit, and

have higher Medicare spending prior to receiving

ambulatory care

12

Key Findings: Comparison of Delivery of Care

Relative to care provided to patients treated in physician

offices, care provided to patients treated in HOPDs is:

• More likely to be delivered to a new patient or referral

• More likely to be for the receipt of treatment

• Likely to include the provision or ordering of more

treatments and services

• More likely to include care from a nurse

13

Additional Issues To Consider

• Explicit payment for hospital standby

services

• Higher payments for services that can

only be provided at hospitals

• Establish transparent payment differential

methodology, rather than ‘caps’

Michael Sack, LFACHE

National Health Policy Forum June 5th, 2015