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Top five strategies for managing post-acute care


Plans must be able to deploy these five tactics, whether using internal resources or collaborating with a vendor.

The time is now for health plans to focus on post-acute care (PAC). Improving PAC management offers the rare opportunity to simultaneously improve quality, save money, and enhance patient experience. Until recently, many plans have focused on more traditional areas for improving quality and achieving savings (such as expanding utilization management or negotiating lower provider rates), despite the fact that up to 25% of a Medicare Advantage plan’s total costs of care pay for PAC services and 20% to 25% of those costs may be waste. Commercial and Medicaid plans traditionally have lower per capita PAC costs, but there are potential savings on a smaller scale for those plans as well.

There are five key elements to a successful PAC plan:

  • Make home the default discharge destination. Making home the default destination for patients being discharged from acute care hospitals requires resources and expertise. Plans must be able to influence discharge planning in acute care hospitals, inpatient rehabilitation facilities (IRFs), long-term acute care hospitals (LTCHs), and skilled nursing facilities (SNFs) across their networks. There is no substitute for working with facility clinicians or using onsite case managers, who can work with discharge planners and coordinate the multiple home health services that many patients will need to successfully complete their rehabilitation and recuperation at home. Successfully guiding patients home not only reduces costs, it is safer in that it can reduce the risks of falling and facility-acquired infections. For elective procedures, planning for post-surgical discharge to home instead of to SNF can reduce costs while making it easier for patients to go home and stay home.

  • Collaborate with PAC providers to manage the length of stay in inpatient rehabilitation settings and home health agencies. The second important strategy for managing PAC is to actively manage length of stay in inpatient facilities. Most SNFs caring for Medicare patients are paid per diem, which means that they are financially motivated to keep their beds full and prolong length of stay. Evaluation of the geographic variation in Medicare payments for episodes of acute illness found that about three quarters of the regional differences in cost were related to differences in PAC utilization of inpatient facilities and home health services, according to MedPAC. This means that the variation in costs reflects differing practice patterns rather than different medical needs of the patients. Reducing length of stay to what is clinically appropriate for individual patients requires using concurrent review of inpatient facility stays, authorizing fewer days at a time, and tactics like putting case managers onsite at SNFs to collaborate with discharge planning teams and help them ease the patient’s transition home. 

  • Reduce readmissions. The third tactic for PAC management is well-known to health plans: focus on reducing readmissions.  There has been significant activity in readmission reduction for over a decade, and hospitals with higher-than expected readmission rates face penalties, including reductions in payment rates, and online publication of readmission rates, according to CMS. There is extensive literature that identifies proven tactics for reducing readmits, including transition coaching programs, medication reconciliation programs, and collaboratives of healthcare organizations who meet regularly to create functional care continua that help patients transition home and stay there. Despite some recent backlash against readmission reduction programs, there is still significant opportunity to improve quality and reduce costs by limiting readmissions.

  • Build effective networks of PAC providers. The fourth tactic is to create and manage effective PAC networks of rehabilitation facilities, home health agencies, and hospices. Network optimization can be approached in two ways: first, analyzing data on organizational performance so that it is clear which facilities and home health agencies do a good job of managing patients with certain diagnoses; and second, by creating collaborative relationships that align financial incentives and pay rehabilitation facilities and home health agencies for improving quality, reducing length of stay, reducing readmissions, and enhancing patient experience.

  • Pay attention to fraud, waste and abuse (FWA). The final tactic in a successful PAC plan is to have a robust program to identify and manage potential fraud, waste and abuse (FWA). There is significant fraudulent use of home health services, especially in use of home visits and durable medical equipment, and this varies by region. Arrests made over the summer of 2017 involved more than 400 individuals implicated in bilking the government out of more than $1 billion in healthcare-related fraud, according to The New York Times. Using a combination of consistent oversight coupled with the use of analytical software to detect patterns of billing irregularities can generate significant recoupments for plans.

All health plans should review their current approach to PAC management, and ensure that it includes the five strategies discussed above. Plan development should also include analysis of market-specific PAC spending data to identify and measure opportunities for savings and determine how to best allocate resources. Now is the time to improve post-acute care.


Michael Cantor, MD, JD, is a geriatrician and attorney with 20 years’ experience in designing and implementing population health and quality improvement programs for health plans and healthcare providers. He is currently chief medical officer (CMO) for CareCentrix, a post-acute benefits management company, and prior to that served as CMO for the New England Quality Care Alliance, the 1,800-physician network for Tufts Medical Center in Boston, where he managed network-wide population health and quality improvement programs. 

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