There continues to be a rising demand for inpatient dialysis services across the U.S. As a result, hospitals are faced with three options:
(1) not providing dialysis services resulting in patients that require dialysis therapy to be transferred to a hospital offering this service
(2) provide the service internally
(3) contract with a dialysis provider
HDS assists hospitals in determining which is the best option
Hospital care represents a significant US healthcare expenditure, accounting for almost one third of healthcare costs nationally and approximately half of Medicare expenditures. According to the Centers for Medicare & Medicaid (CMS), these costs are exacerbated by a high rate of adverse events during in-patient treatment; more than 15% of Medicare patients experience an adverse event during their hospital stay, and a third require readmission within a month of release. Adverse events and associated hospital readmissions constitute avoidable healthcare costs that are associated with quality of care. In 2013 patients with end stage renal disease (ESRD) averaged 1.7 hospital admissions per year with an average length of stay of 6.36 days. Unplanned readmissions averaged about 30%. The average cost for inpatient care per ESRD patient was $29,350.
Improvement in the quality of hospital care is therefore viewed by the federal government as vital to achieving better patient outcomes and lower healthcare costs. The National Strategy for Quality Improvement in Health Care, a requirement of the Affordable Care Act of 2010 (ACA), is an evolving guide focused on 6 priorities with potential for rapid improvement in health outcomes and effectiveness in care:
- Making care safer by reducing harm caused in the delivery of care
- Ensuring that each patient and family are engaged as partners in their care
- Promoting effective communication and coordination of care
- Promoting the most effective prevention and treatment practices for the leading causes of mortality
- Working with communities to promote wide use of best practices for healthy living
- Making quality care more affordable for individuals, families, employers, and governments by developing and spreading new healthcare delivery models
These priorities are interwoven and must be addressed in a multifaceted, diverse approach to successfully bring change to a loosely organized healthcare system. The strategy focuses on local, state, and national efforts to promote health care centered on the needs of patients, families, and communities by marshaling a wide variety of resources across all sectors of health care and government.
“Value-based Purchasing is a tool that allows CMS to link the national quality strategy to the goal of lower costs through improvements on a national scale,” said Moody–Williams. “It is another important driver in revamping how services are paid for, moving increasingly toward rewarding providers and health systems that deliver better outcomes in health care at lower cost to the beneficiary and the community they serve. This undergirds all the work that CMS will do around Value-based Purchasing.”
The Hospital VBP Program will reward acute care hospitals for improving how they deliver high-quality, efficient, and effective health care to Medicare beneficiaries. Beginning with patients discharged in October 2012, Hospital VBP aligns a portion of a hospital’s payment rate to its performance on clinical process and patient experience measures, giving providers financial incentive for continuous improvement in care.
How Can HDS Assist Hospitals?
The following are examples of Hospitals with inpatient only programs who consulted HDS in the past three years:
Regional West Medical Center; Scottsbluff, NE
Cleveland Clinic; Cleveland, OH
Carillion Clinic; Roanoke, VA
Mercy Hospital System; St. Louis, MO
Doctor’s Hospital; Laredo, TX
McAllen Medical Center; McAllen, TX
Edinburg Regional Medical Center; Edinburg, TX
Fort Duncan Regional Medical Center, Fort Duncan, TX
HDS assisted hospitals in evaluating its current dialysis service (internal or contract) to determine if the current service meets the core objective of providing high quality cost effective service and in identifying opportunities to reduce cost and enhance the quality of the service.
In recent years’ regulatory agencies such as CMS and JACHO have reference the Medicare ESRD Provider Conditions for Coverage when surveying a hospital’s inpatient dialysis service. Hospitals are held accountable for compliance to regulations that are deemed applicable in the inpatient dialysis setting. This requires hospital administration to have knowledge of the regulations and to provide proper oversight of the service whether provided internally or through a contract provider.
HDS can conduct a clinical and technical overview of your inpatient dialysis service whether the service is conducted internally or through a contract provider to include:
- Conduct a mock compliance survey – observe patient care staff performing dialysis treatments, water treatment procedures, audit logs, and interview staff
- Review of policies and procedures
- Chart review on a representative sample of dialysis treatments
- Review of Quality Assurance Performance Improvement (QAPI) process
ESRD patients are often among the most resource intensive served by the hospital. HDS works with hospital resources to generate ESRD admissions data which can be queried to show revenue, cost, and length of stay for the most frequent DRG’s. From this data, the hospital can develop initiatives which improve quality, reduce costs, and minimize readmissions.
In addition, HDS has facilitated the development of co-management agreements which allow admitting nephrologists to assist the hospital leadership with prioritizing and implementing initiatives to improve quality and financial outcomes on these resource intensive admissions.
Since the majority of dialysis patient admissions are covered by Medicare or Medicaid, reimbursement is under the DRG or similar payment system. This means that it is even more critical to not only capture activity and utilization correctly, but charge appropriately for the services provided to patients covered by nongovernmental payers.
HDS can review the charge capture system as well as the fee schedule to compare to the market rates for similar hospitals.
Direct Expenses under a Contract Service
With revenues primarily generated from the DRG payment system, it is imperative that hospitals have a clear understanding of the real cost per dialysis treatment. For hospitals using a contract dialysis service, a couple of things are happening nationally. First, the Large Dialysis Organizations (LDOs) have garnered enough market share that their inpatient fee schedules are increasing. In some places, the increases are dramatic. Secondly, many contracts contain hidden charges that add substantially to the costs per treatment and often go undetected. What precisely is the dialysis company providing within each treatment and what is left for the hospital staff to provide, and how are those services billed to the hospital?
Periodically, a hospital should take a detailed look at their inpatient dialysis contracted costs (per dialysis treatment rate plus ancillary fees) and, most importantly, what value they are receiving for this amount, versus what it would cost to provide the service internally. HDS has the resources to not only ascertain whether a contract is the most cost effective option, but also to help a hospital set up to provide the service internally if that is the ultimate decision. Additionally, HDS can help a hospital shop for and select a new inpatient dialysis provider.
Direct Expenses under an Internal Service
HDS can conduct an analysis of variable costs per treatment per modality (direct patient care labor, medical supplies, equipment maintenance) for in house services from which cost improvement strategies can be identified to include defining financial targets for direct patient care labor and medical supply cost per treatment.
Jean Moody-Williams, RN, MPP, CMS Value-based Purchasing Targets Complications, Readmissions; CME/CE Released: 05/29/2012 ; Valid for credit through 05/29/2013