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By: Lisa Remington, President Remington Health Strategy Group

MedPAC, the committee that reports to Congress on Medicare, has had recent discussions on evaluating current discharge planning procedures. In this article, we discuss possible changes ahead in the ways patients and discharge planners may choose post-acute providers.

The Medicare Payment Advisory Commission (MedPAC) is discussing ways to modify the existing discharge planning process. The discussion includes leveraging discharge planner recommendations to use high-quality providers, and factors influencing beneficiaries’ choice of PAC providers. 

Highlights of the discussion:

  • Helping beneficiaries select better quality providers should be a goal of the discharge planning process.
  • Providing hospital discharge planners with tools and authority to recommend high-quality providers to advance the goal.
  • Identify high-quality PAC providers necessary to achieve the objective.

MedPAC staff member Evan Christman outlined three possible approaches:

  • Flexible: Hospitals define their own quality measures and levels of performance for the facilities, and generate a list of high-quality providers to be shared with patients; hospitals would be required to collect and review performance data on the post-acute care providers, and maintain a formal record of the process
  • Prescriptive: Hospitals must use Medicare-defined quality measures and performance levels; the Centers for Medicare & Medicaid Services would notify hospitals and beneficiaries of qualifying post-acute care providers
  • Revised prescriptive: Medicare would account for variations in post-acute provider quality across markets, and could include specific data on how a provider stands up against competitors in a given geographic area

Quality Data Little Influence on PAC Provider Choice and Discharge Planning

Publicly available quality data is rarely a factor in Medicare beneficiary choice of a post-acute care (PAC) provider, according to Medicare Senior Policy Analyst Evan Christman.

“In practice, beneficiaries report relying on information from trusted sources like health care providers, families, or others that may have experience with PAC,” Christman told the Medicare Payment Advisory Commission (MedPAC) March meeting in Washington.

“The Balanced Budget Act of 1997 requires hospitals to provide beneficiaries with a list of SNFs and HHAs nearby, but the list is not required to include quality information." 

“These trusted intermediaries are often considered by beneficiaries to be more important sources of information than Medicare's publicly reported quality data,” such as available on Nursing Home Compare and Home Health Compare. “Factors such as distance from a beneficiary's home and community reputation are commonly cited by beneficiaries as important when selecting a provider. Beneficiaries report that they would like to receive more advice” from hospital discharge planners, but “discharge planners cannot make recommendations.”

Most SNF and HHA users had a nearby provider of higher quality, according to a study by MedPAC staff. For each patient selected, it was determined how many providers with a better performance on a composite measure were operating within 15 miles of the beneficiary's residence:

  • SNF: 84.3 percent of beneficiaries had at least one higher-quality SNF nearby; 46.8 percent had 5 or more.
  • HHA: 94.5 percent of beneficiaries had at least one higher-quality HHA nearby; 69.5 percent had 5 or more.
  • Beneficiaries in urban areas generally had more higher-quality options nearby.

Higher-quality providers “had meaningful differences” compared to other providers, such as significant differences in re-hospitalization rates. “This has real consequences for beneficiaries, as those served by low-quality providers will have more hospitalizations and likely have worse clinical outcomes.”

Christman added that “for some conditions, it will also mean that hospitals face steeper penalties under programs like the Hospital Readmissions Reduction Program.  And, in addition, Medicare receives less value for the PAC care it buys, and spends more on re-hospitalizations than it should have to.”

Could This Be Corrected by the IMPACT Act?

The Balanced Budget Act of 1997 requires hospitals to provide beneficiaries with a list of SNFs and HHAs nearby, but the list is not required to include quality information. “Medicare statute provides beneficiaries with the freedom to choose their PAC provider, and the laws states that hospitals may not recommend providers,” Christman noted.

The IMPACT Act (Improving Medicare Post-Acute Care Transformation Act of 2014) created a new requirement that hospitals use quality data during the discharge planning process and provide it to beneficiaries. But regulations implementing this new requirement have not been finalized.

MedPAC Commissioners discussed two options for providing this authority: a “flexible approach” whereby hospitals would collect and provide quality data on PAC providers; and, a “prescriptive approach” in which Medicare would develop a single quality standard and would notify hospitals and beneficiaries of qualifying PAC providers.

MedPAC plans to include discussion of this topic, and possible solutions, in its June 2018 report to Congress on Medicare and the Health Care Delivery System.

Hospital Discharge Planners and Recommendations of Post-Acute Providers

Attorney Elizabeth Hogue weighs-in.  ©2018 Elizabeth E. Hogue, Esq.  All rights reserved.

MedPAC advises Congress about Medicare.  The Remington Report in its October 4, 2017, edition of FutureFocus reported that a MedPAC staff member stated as follows at MedPAC’s September meeting:

“The Balanced Budget Act (BBA) requires hospitals to provide beneficiaries with a list of nearby SNFs and home health agencies but the list is not required to have quality information….Medicare statute provides beneficiaries with the freedom to choose their PAC provider, the law states that hospitals may not recommend providers (emphasis added).”

Then in the March 7, 2018, edition of FutureForcus, a link was provided to a power point presentation presented by MedPAC on March 1, 2018.  A slide entitled “Discharge planning is a hospital responsibility” that was included in the presentation states as follows:

“…Hospital discharge planners may not recommend specific providers—beneficiaries have freedom to choose PAC providers.”

Is it true that hospital discharge planners are prohibited from recommending post-acute providers to patients based on applicable federal requirements?  The answer is a resounding NO!

The basis for the remarks of members of the staff at MedPAC seems to be Conditions of Participation (CoPs) of the Medicare Program that establish requirements for hospital discharge planning.  Specifically, 42 CFR 482.43(7) says that hospitals must not specify or otherwise limit the qualified providers that are available to patients.

But making recommendations to patients about post-acute providers while emphasizing patients’ right to choose providers does not entail “specifying” or “otherwise limiting” the providers available to patients.  In fact, such discussions seem to be required by applicable national standards of care the Case Management Society of America and sanctioned by the Centers for Medicare and Medicaid Services (CMS).  Prohibiting these types of discussions also have practical implications for patients and their families.

Specifically, the Case Management Society of America (CMSA) first published Standards governing the practice of case management, including hospital discharge planners/case managers in 1995.  The Standards were revised in 2002, 2010 and 2016.  Among other requirements, these standards require case managers to advocate on behalf of patients, including provision of assistance with making decisions about their care.

In addition, CMS sanctioned the use of making recommendations to patients through the use of preferred providers.  In final regulations of the Comprehensive Care for Joint Replacement Payment Model for Acute Care Hospitals Furnishing Lower Extremity Joint Replacement Services at 80 Fed. Reg. 73274 (November 24, 2015, CMS says on Page 73518:  “We agree that hospitals should be allowed to identify preferred providers and suppliers.”

CMS goes on to say on Page 73520 that:

“…hospitals, if desired, may recommend “preferred providers,” that is, high quality PAC providers/suppliers with whom they have relationships (either financial and/or clinical) for the purposes of improving quality, efficiency, or continuity of care.”

Finally, anecdotally, hospital discharge planners/case managers often report that patients are unable to choose post-acute providers when lists are presented to them.  In light of MedPAC’s comments above, it sounds like discharge planners/case managers are unable to provide assistance to patients except perhaps to hand them the equivalent of a copy of the yellow pages!  From a practical point of view, this dog will not hunt!  In fact, the “heart” of the discharge planning process includes recommendations from discharge planners/case managers about the best choices for patients.  Patients are, of course, free to reject these recommendations.

Case management/discharge planning activities have always been at the heart of our healthcare delivery system. These crucial activities are finally receiving the recognition and “due” that they deserve. They should not be mischaracterized!

Home Health Agency Sues Hospital for Violations Related to Patients' Right to Freedom of Choice

Attorney, Elizabeth Hogue, provided a recent article regarding a lawsuit against a hospital for violating patients’ right to freedom of choice.

American Home Healthcare System, Inc; a free standing home health agency in Indiana, has sued Floyd Memorial Hospital and Baptist Healthcare System for violations of antitrust laws related to patients' right to freedom of choice. In a recent Memorandum Opinion and Order, the U.S. District Court refused to dismiss the case. American Home Healthcare Servs, Inc. v. Floyd Mem'l Hosp. and Health Servs, No. 4-17-cv-00089-TWP-DML, (S.D. on Mar. 5, 2018).

In this case, American Home Healthcare claims that the Hospital engaged in tortious and anti-competitive conduct specifically intended to monopolize home health agency referrals from the Hospital to Floyd Home Health and to interfere with patients' relationships with their existing home health providers.

Floyd Hospital in New Albany, Indiana, owns Floyd Home Health. American is also a home health agency and is located in Jeffersonville, Indiana. Both agencies operate in six (6) identical counties.

“Is it true that hospital discharge planners are prohibited from recommending post-acute providers to patients based on applicable federal requirements?  The answer is a resounding NO!”

According to the Court, when home health services are necessary, Medicare regulations require the Hospital to provide patients with a list of home health agencies that are Medicare certified, available and that serve the geographic area in which patients reside. According to the Court, home health agencies must request to be listed by the Hospital as available. As part of the discharge planning process, the Hospital may not specify or limit the qualified providers that are available to patients and must inform patients of their freedom to choose among participating Medicare certified home health agencies.

American claims that although it is included on the list presented to patients, the hospital has built mechanisms into the discharge planning process that increase the likelihood that Floyd Home Health will receive the most patient referrals. Specifically, American claims that physicians who make home health referrals must go through an extra step to select any home health agency other than Floyd due to the fact that the only two (2) choices on the computer drop-down menu are "Floyd" and "other." If patients want to use the "other" category, physicians have to go through an extra step to write down which agency patients chose.

American also claims that 64% of the Medicare patients discharged from the Hospital to home health agencies were referred to Floyd Home Health while the remaining 30.2% of referrals were spread among six (6) other home health agencies. American says that in 2015, it received eleven (11) referrals from the Hospital or 1.3% of Medicare patients discharged from the Hospital. American also says that many referrals received from the Hospital included patients with undesirable payor sources such as the Medicaid Program or patients that resided far away.

Based on reports from patients and their families, American also says that the Hospital denied patient choice by referring patients to Floyd Home Health without offering any choices, by advocating exclusively for Floyd Home Health and/or assigning patients to Floyd Home Health despite patients' choices to use American's services.

Section 2 of the Sherman Act recognizes claims based on attempted monopolization i.e. when "the employment of methods, means and practices which would, if successful, accomplish monopolization, and which, through falling short, nevertheless approach so close as to create a dangerous probability of it."

Proof of claims of attempted monopolization requires: (1) a specific intent to monopolize i.e. to gain the power to control prices or to exclude competition in a line of commerce; (2) predatory or anticompetitive acts to further the purpose of monopolize; and (3) a dangerous probability of success in the relevant market which requires evidence that the defendant had sufficient market power to reasonably create a monopoly.

American contends that the relevant product market is home health services following discharge from hospitals since Medicare regulations provide for a distinct product by imposing unique requirements for discharge planning from hospitals. The Hospitals maintains that the product market is defined as home healthcare services without regard to referral sources since statutes in Indiana do not limit home health services to services following discharge from hospitals.

The Court decided that the Hospital's exclusion of patients from competing home health agencies weighs in favor of a dangerous probability of success that Floyd Home Health could achieve monopoly power in the home health market. Likewise, American's allegation that the Hospital has steered and disregarded patients' choice, a violation of Medicare rules, may also serve to satisfy the requirement of predatory or anti-competitive conduct. Based on these findings, the Court concluded that American has alleged facts in stating a plausible claim for attempted monopolization in violation of Section 2 of the Sherman Act.

So there it is! Honoring patients' right to freedom of choice continues to be a source of great concern for agencies that are not hospital-based. Although MedPAC and others continue to talk about changes in patients' rights, such changes would require repeal of sections of a federal statute, the Balanced Budget Act of 1997, and withdrawal or modification of conditions of participation (CoPs) governing hospital discharge planning. Hospitals should expect more lawsuits based on violations of patients' right to freedom of choice!

Under the Microscope

The discussions on evaluating the future of discharge planning procedures is a hot topic. Pushing the discussions is the IMPACT Act. Post-acute providers are all ears. 


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