As lawmakers and federal agencies consider additional Medicare cuts to skilled nursing facilities, the American Health Care Association (AHCA) is countering with a proposal to encourage providers to reap savings for the program by reducing their hospital readmissions.

This approach would be more equitable, innovative, and care-focused than simply cutting provider rates through Medicare bad debt and other potential payment reductions, AHCA says.

The bad debt proposal “is a cut which threatens some of the most vulnerable individuals’ access to care, while achieving the needed savings by reducing hospital readmissions is an approach that meets fiscal goals through improvements in quality,” said Gov. Mark Parkinson, AHCA president and chief executive officer.

An AHCA overview of the hospital readmission issue points out that they “are not only a physical strain on patients, but a costly strain on the American taxpayer.”

One in five patients discharged from the hospital return within 30 days, costing Medicare $17.4 billion in 2010, AHCA says. Almost one-fourth of these beneficiaries are skilled nursing facility (SNF) patients receiving post-acute care.

While many providers have already begun making strides to reduce rehospitalizations, AHCA says its proposal would accelerate these efforts by giving providers incentives to achieve $2 billion in Medicare savings from 2014 to 2021.

Under the proposal, the secretary of Health and Human Services would set a targeted readmission reduction goal needed to hit the $2 billion mark, and SNFs would work toward that goal. If savings were not achieved, the SNF market basket update would be reduced to make up for the shortfall in expected savings. If providers met the savings goal, they would share in additional savings gained through lowered readmissions.

The proposal also gives AHCA some common ground with the Medicare Payment Advisory Commission (MedPAC). At a January meeting, MedPAC voted to recommend rebasing Medicare SNF payments and eliminating the market basket in 2013, policies that AHCA said it opposes. But at the same meeting, commissioners offered positive acknowledgment of AHCA’s readmissions proposal.
“AHCA is encouraged by MedPAC’s discussion of future rehospitalization policy,” Parkinson said
in a statement. “We were especially pleased MedPAC acknowledged AHCA’s proposals to reduce
rehospitalizations.”