Why the case for ACO in controlling the cost of chronic disease?

Why the case for ACO in controlling the cost of chronic disease?

Using Medicare as a case scenario in evaluating the rising cost of care, health care expenditure for Medicare patients is rising due to the treatment of lifestyle-related chronic conditions such as diabetes (Andrew, 2010). As noted by Berwick (2011),two out of three Americans aged 65 years and over suffer from multiple chronic conditions. A new finding by CMS reports that 93% of Medicare fee-for-service spending goes into the care of its patients with multiple chronic conditions. Care received by these Medicare beneficiaries comes from multiple physicians. Lack of coordinated care can lead to patients not receiving the needed care, receiving duplicative care and suffering from medical errors; hence the need for a more coordinated care using an ACO structure.On the average, one in seven Medicare patients on hospital admission suffers from medical error in the course of receiving care every year. Again, nearly one out of five Medicare patients discharged from hospital is readmitted within 30 days. This readmission rate could be prevented if care had been better coordinated (Berwick, 2011).[Also, Medicare won’t pay!]

The ACA reform allows for Current Procedural Terminology (CPT) and payment weight charges that factor in additional payment for enhanced discharge planning practices as well as permit for gain-sharing that will allow system providers to share cost savings achieved as a result of adopting quality care practices that reduce readmissions. Conversely, the ACA bundled payment structure pays for an episode of care (and not per visit) as each readmission is counted as the same initial episode of care. This means that providers will not be paid or reimbursed for readmissions, and all cost related to readmissions will be borne by the providers.

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Tactically, one of the ways the ACO can stratify to reduce the cost of healthcare is to prevent hospital readmission. While some hospital readmissions are unavoidable, most are due to preventable causes and hence the target that it can be addressed to reduce cost by the ACO [explain this].

In a study by Friedman and Basu (2004), it was noted that 19% of patients with initial preventable admission also had at least one preventable readmission within six months of discharge costing about $730 million. Gilmore (2009) also noted that 34% of discharged patients were readmitted after 90 days of discharge and 67.1% of patients were either readmitted or have died after 1 year of discharge. Accordingly, any measure aimed at reducing avoidable or preventable admission will go a long way in reducing the cost of health care. [specific examples?] In another study by Minot (2008), four years later which focused on the overall cost of readmission of medical patients, she noted an alarming cost of 18% of total healthcare spending attributable to readmission, at a revolving cost estimated at 17.4billion. This trend has continued.

Some of the causes of readmission amongst diabetic patients include breach in communication between the physician and the patient; missing list of prescribed medication; lack of follow-up appointments; confusing instructions; inappropriate wound care and inefficient monitoring of patient after discharge (Gilmore, 2009). Additionally, lack of proper knowledge by family members on how to care for discharged patients also contribute to readmission (Extend Health, 2012). All these combine to present a picture of fragmented system of care that can be adequately addressed through an integrated system of care seen in the ACO legal structure. The ACO presents a unified system of care that will reduce readmission through an appraisal of continuum of care from before, during and after initial hospital admission. This is done through improved discharge planning that entails proactively planning for discharge right from the time of sentinel admission [rewrite this it is not saying anything] that will include having the necessary plan for prescription refill and scheduling appointments with Primary Care Physicians (PCP) (Minott, 2008). Furthermore, the ACO integrated system incorporates initiatives that improve systemic failures through consolidated service delivery, home health care providers’ service, community prevention and follow-up services and telephone call service to patients and family members after discharge. [add specifics]These measures have been shown to produce a significant reduction in readmission in Gotham hospital. [this is the discussion we need to see more of. It is specific and talks to the ACO structure]

Furthermore, the payment reform presented by the formation of the ACO can serve both as a deterrent to avoid the fragmented care system that encourages readmission as well as provide an incentive that rewards providers for avoiding readmission. Therefore, the reformed payment structure gives monitory reward for providing standard of care that will limit readmission through gain-sharing as well as penalize providers for rendering a fragmented care that encourages readmission through the provider bearing the cost associated with needless readmissions.

The pay for performance structure under the ACO reimbursement structure will not offer incentives for providers to readmit patients. Improving coordination and communication among physicians and other health providers and suppliers through ACO will help improve the care received by Medicare patients while also helping reduce costs. According to the analysis of the proposed regulation for ACOs, Medicare could potentially save as much as $960 million over three years (Berwick, 2011).

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