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Alternative Payment Models: The Emergency Department Canaries Are Beginning to Chirp

Susan Nedza MD, MBA, FACEP

Bird in a cage

nedza It was not so long ago that emergency departments (ED) were first identified as the canaries in the coal mine for the health of the community and the healthcare system at large. Be it lack of access to primary care, lack of mental health services, increased demand driving ED crowding or the recent illicit drug epidemic, our departments continue to be on the frontline and to embrace the responsibility to inform the public and policy makers about issues that affect our patients. It is time to formally recommit to this role as Alternative Payment Models (APM) launched may threaten the safety of our patients.

As the link to the community, the ED is uniquely positioned to identify both the benefit and harm that often come with changes in care delivery. Embracing this responsibility will be critical as CMS continues to accelerate the testing of APMs such as the Comprehensive Care for Joint Replacement (CJR) program that was launched on April 1, 2016, in over 800 hospitals.1  

The CJR program is a retrospective payment mo/del in which CMS sets target prices for all services associated with lower limb joint replacement surgery. This payment includes all hospital, professional, and post-discharge costs including home health, skilled nursing facilities, rehabilitation services, readmissions, and outpatient services including most (ED) visits within 90-days of the index surgery. CMS sets a quality-adjusted target price for all services within an episode for patients undergoing elective total hip replacement, emergent total hip replacement associated with hip fractures, or elective total knee replacement. At the end of a reporting period, the actual CMS payments made to all providers are reconciled with the target price. In all five years of the program, hospitals will be able to receive a share of savings if the come in under target. In years 2-5, they will assume financial risk and become responsible for reimbursing CMS when the aggregate inpatient and post-acute spending exceeds the targeted payment for each of these groups.

Intended Impact

If all goes as expected, ED visits within the 90-day post-operative period will decrease, readmissions will decrease and there will be overall cost-savings as hospitals, physicians and post-acute care providers coordinate care and “right-size” resource allocation for each patient. Gainsharing and financial incentives will provide additional impetus for physicians to support process redesign and appropriate resource use thus making care more efficient. Performance measures linked to payment will encourage hospitals to improve patient satisfaction as well as to begin collecting patient reported outcome data.

CMS is required to monitor the impact of the program on quality and cost as well to identify unintended consequences of this shift in payment policy. This work will be contracted out by CMS to a vendor of such services on a retrospective basis. Is it sufficient? Most likely not, as certain provisions have already been identified as threats to the quality of care.

Potential Unintended Consequences

Early Discharge to SNF
The program includes provisions that waive the three-day stay rule that qualify patients for skilled nursing facility (SNF) stays if they are discharged to a 3-Star SNF. This may encourage hospitals to discharge frail patients sooner as a way to reduce inpatient costs. There is some evidence that this is already occurring. In a report to CMS, the Lewin Group2 identified a statistically significant increase in ED visits (without hospitalization) from 6.7% to 8.7% during their evaluation of early Bundled Payment for Care Improvement (BPCI) results for joint replacement bundles.

Emergency physicians might not be surprised by this finding, but policy makers have paid little heed to this effect. The next round of bundled payment programs embrace this waiver. Whose responsibility is it to validate the finding from BPCI? To monitor it? If it is a CMS contractor, there may not be any response until the next report. They will also use administrative data that will provide little guidance in how to mitigate the risk. In the meantime, this incentive will continue to impact patients.

Proactive data collection should be undertaken to identify which patients “bounced back” within 3 days of discharge. Other questions cry out for a data collection strategy (such as, “How often did patients require readmission for conditions such as anemia or decompensated CHF that might have been managed during a longer hospital stay?”). Surveys will also be needed to determine if hospital financial incentives are forcing early discharges that are not supported by physician judgement. This work is needed in order to identify patients being potentially harmed by early discharge as well as to validate the role the ED plays as a safety net in this program.

Discharge to Home
The same report identified a decline in the use of inpatient rehabilitation admissions and SNFs from 66% to 47% during year one of the program. A significant shift to home health care from both of these locations was also noted. Again, questions abound. What will happen to medically-fragile patients when they go home instead of to a post-acute care facility? What if they live alone? If a patient undergoes joint replacement secondary to a fall, will they continue to be at risk for an ED visit during the post-operative period? In this scenario, the dollars saved on the post-discharge disposition, may be consumed by additional ED visits. More importantly, the decision may lead to patient harm if a fall prevention program is not deployed within the organization.

ED Disposition
The scrutiny on ED disposition will expand. The pressure that heretofore existed to avoid readmissions within 30 days of discharge will include most readmissions occurring within 90 days. In a population where ED visits are not uncommon, the normal rate of visits in the population should be considered in identifying preventable readmissions. This work is critical as ED physicians will face increased pressure to discharge patients solely on the fact that they underwent the procedure up to 90 days before the ED visit.

Observation admits will also be scrutinized as the cost of care is rolled up into the bundle. The hospital will not be able to shift the cost of this care by avoiding admission.

In addition, ED physicians may be increasingly asked to transfer patients to the institution in which the surgery occurred or to discharge patients home at all costs.

Delayed Outpatient Care
As the overall cost of outpatient care is included, it is not inconceivable that diagnostic testing may be delayed or not completed post-discharge. This may result in more patients requiring extensive workups in the ED. As the cost of ED care impacts the overall price, ED physicians will be under similar pressure as primary care and long-term care physicians to manage resource utilization. It is not inconceivable that patients who require diagnostic testing will be sent to the ED to avoid the attribution of costs.

A Call to Lead

It is clear that if CMS and other payers are to understand the impact of these payment models, the ED provides a suitable place to start measuring the impact of certain provisions within the programs. ACEP is well positioned to forward this agenda through a variety of vehicles including patient safety grants, EMF funding, or through measurement development and deployment via the clinical emergency data registry (CEDR).

These programs are proliferating. On July 25, 2016, CMS proposed new bundled payments for AMI and CABG.3 Groups such as the Health Care Payment Learning and Action Network will push to expand these models into the private payer realm. To date, little time or planning has gone into ensuring that the unintended consequences of these programs do not harm patients. Emergency physicians are not only well-positioned, but ethically obligated, to address this shortcoming.

1. Centers for Medicare & Medicaid Services. Comprehensive Care for Joint Replacement. Accessed June 24, 2016.

2. Lewin Group. CMS Bundled Payments for Care Improvement (BPCI) initiative Models 2-4: year 1 evaluation and monitoring annual report. February 2015. Accessed June 24, 2016.

3. Center for Medicare & Medicaid Services. Episode Payment Models: General Information. Accessed August 25, 2016.

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