By Rose O. Sherman, EdD, RN, FAAN
“Our healthcare system is in critical condition. Each year, fewer Americans can afford it.Fewer businesses can provide it. Fewer government programs can promise it for the future generation”. Clayton Christensen
I am sure that many of you are watching with interest the Presidential debates and the discussions about health care reform. Regardless of your politics, this is really a key issue. Left unchecked, we could spend over $13,000 for every man, woman and child in the United States by 2018. The path that we are on is unsustainable. Nurses need to know basic information about health care financing because it impacts clinical decision making in health care agencies. Future proposed changes in reimbursement could dramatically change health care delivery as we know it today. There are 5 key things that every nurse should know today about health care financing:
1. The cost of care is skyrocketing.
Between 1999 and 2011, the cost of health care soared 76%. US health care costs now far exceed other developed countries yet if you look at our outcomes on a variety of World Health Organization measures such as infant mortality and life expectancy, our rankings are disappointingly low. Part of the reason for this involves our health care safety net. Many Americans today cannot afford or don’t qualify for insurance. They go without needed preventative care. Our safety net for many individuals is limited to emergency, high cost care because their rights to this care are protected by EMTALA (the Emergency Treatment and Liability Act) regardless of abiity to pay.
2. More than half of health dollars go to hospitals and providers.
A key piece of information in putting together the healthcare financial puzzle is to look at how healthcare dollars are spent. Hospital care is the single highest spending category at 31% with providers and clinical services at 20%. Not surprisingly when cuts are proposed, these big ticket items are looked at first.
3. Medicare and Medicaid reform is inenvitable.
Back in the 1965 when Medicare was passed, the average life expectancy of a man in the United States was 66 and 73 for women. Few people at the time stayed on Medicare for longer than a decade. Life expectancy has increased seven years in the past four decades. The growth in Medicare has also escalated because the Baby Boomer generation is now reaching Medicare age. Knowledgeable health care cconomists believe that Medicare solvency will become the single most critical healthcare issue impacting the US by the end of this decade.
Medicaid is the safety net program for children and other individuals who are indigent and/or disabled and not yet eligible for Medicare. With 17.6% of US citizens now below the poverty line including one of every five children, enrollment in Medicaid has skyrocketed as have the costs. Unlike Medicare which is a federal program, Medicaid is federal-state partnership and the program has different criteria and benefits across different states. A significant challenge with Medicaid is that providers and hospitals who see these patients often lose money on care. Access to providers can be challenging for Medicaid patients. Given all of these factors, Medicare and Medicaid reform is inevitable.
4. Reimbursement is now based on performance.
Historically, our health care system was based on a payment for service delivery model. The new model for reimbursement is moving to Pay for Performance. Pay for Performance is designed to reward those providers and hospitals with good outcomes and penalize those who fall into the lower 10%. The message today is that better outcomes do matter. If you practice in a US hospital, you are familiar with the term Core Measures. These include practices such as giving an aspirin to a patient who has an acute MI upon arrival to the ER or providing smoking cessation education prior to discharge for a patient admitted with heart failure. Very simply, these are evidence-based best practices to improve care and hospitals must report compliance with the measures.
You probably have also heard about “Never Events”. These are things that should not happen if hospitals used proven prevention practices or exercise caution. Hospitals and providers are no longer reimbursed if a growing list of never events happens when a patient is hospitalized. The penalty and costs can be quite high. A serious patient fall can cost a hospital $40,000 in out of pocket care costs that they are not reimbursed for. Preventing Falls is now a major nursing initiative and has resulted in best practices such as hourly rounding. If you work in the ER, you are probably seeing that patients are receiving thorough skin assessments often with pictures to document the presence of skin breakdown at the time of admission so there is no question about when and where it occurred.
Not all Pay for Performance items involve specific care measures or never events. The Affordable Care Act has provisions to include patient perceptions of care as part of a reimbursement strategy. HCAHPS (Health Consumer Assessment of Providers and Health Systems) is a survey that assesses the patient’s perception of the quality of his or her care. Nine of the 27 questions on the survey which is required on Medicare discharged patients are linked to nursing care. Beginning in October 2012, reimbursement to hospitals will be impacted by the results of this publicly reported survey.
5. Keeping patients out of the hospital is the future of care delivery.
Under the recently passed Affordable Healthcare Act, hospitals and providers could be penalized for patients who are readmitted within 30 days beginning October 2012. Initially the focus will be on patients with the diagnoses of Heart Failure, Acute Myocardial Infarction and Pneumonia. This newest trend will impact reimbursement and possibly change healthcare as we know if today. We see hospital systems now buying physician practices, homecare agencies and other traditionally outpatient services because it is clear that the new direction for reimbursement will be to keep patients out of the hospital. Many healthcare leaders predict that we will have 20-30% fewer hospital beds by the end of this decade. Care will move into the community and this trend will be driven by reimbursement.
These are important financial trends that nurses need to be aware of. The good news is that the future for nursing looks very bright. With health reform and changes in reimbursement, there will be new nursing roles and opportunities as the focus changes from acute care to holistic community-based care.
Read to Lead
Kaiser Family Foundation (2012). Healthcare Financing and Reform Click Here for Website
Sherman, R. (2012). The Business of Caring: Healthcare Financing for Beginners Click Here for Presentation
© emergingrnleader.com 2012
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