AARC Times — May 2013
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Health Care Reform & Respiratory Care: A Defining Moment
Patrick J. Dunne

With President Barack Obama’s re-election for a second term last fall, remaining challenges to the continued implementation of the Patient Protection and Affordable Care Act of 2010 (ACA) all but disappeared. As a result, health care providers nationwide (individual and institutional alike) are now compelled to address many organizational and operational issues that have been identified as contributing to a health care delivery system that is overly expensive, results in poor quality outcomes, and is (at best) only marginally effective. As one looks at the various reform initiatives currently underway, there is no doubt that the acute care hospital is “front and center” in terms of where the majority of change is now taking place. This is due to the fact that hospital care accounts for almost one-third of all health care expenditures each year, making it the most expensive sector.1 When one talks about changing how acute hospital care is rendered (and ultimately paid for), it all begins at the patient’s bedside. As advocates for patients with acute and chronic respiratory care needs, we, as a profession, are now faced with a golden opportunity to demonstrate just how much value we can contribute.

Challenges facing acute hospitals

There is no doubt that these are challenging times for the senior executive leadership of acute hospitals. Table 1 is a partial list of these challenges. Let us now turn our attention to each one and see how and where respiratory therapy departments can bring value to our beleaguered hospital administrators while also improving patient care outcomes.

Perception of traditional system as wasteful and unsafe

In a September 2012 report, the prestigious Institute of Medicine estimated that under the traditional health care delivery system, about 25% of what we spend each year on health care is “squandered” — amounting to a staggering $750 billion.2 Topping the list of the contributing factors is unnecessary care/services, followed by excessive administrative overhead, inefficient delivery processes, inflated pricing, prevention failures, and fraud and abuse. If one assumes these estimates to be correct — and there is compelling evidence they are indeed valid — that means one-fourth of total health care spending does not contribute to any positive patient outcomes and probably results in numerous negative consequences. Thus, it is now widely believed that waste in health care is spending that can be eliminated without reducing the quality of care. One can only imagine how much better off we would be if even a portion of that $750 billion could be re-directed to more meaningful and productive patient care activities. For our part, we should evaluate current clinical practices to identify areas of unnecessary care, inefficient delivery processes, and prevention failures, and seek to develop and implement suitable enhancements. One way would be to develop evidence-based clinical protocols to guide the delivery of all prescribed care.

Expanding Medicare population

Known as the “Gray-haired Tsunami,” the baby-boomer generation is already impacting the Medicare Program. Since Jan. 1, 2011, and continuing for the next 12 years, approximately 10,000 baby boomers turn 65 each day.3 That’s about 3.5 million new Medicare beneficiaries a year and will represent an increase from the current 49 million beneficiaries to as many as 80 million by the year 2030. The biggest concern is that annual Medicare spending is already a hefty $556 billion a year for current beneficiaries; and without some drastic measures, total costs are projected to reach an astounding $1.1 trillion by 2022, an amount that is clearly unsustainable.1 A secondary concern is the high prevalence of chronic disease in the expanding Medicare population, as we now realize that almost three-fourths of total annual health care expenditures goes for the care of patients with one or more chronic medical conditions. 4 One important strategy respiratory therapy departments can do to help curb chronic care costs is to shift away from simply treating symptoms and to implement proven disease management processes for our COPD patient population.

Value-based Purchasing (VBP)

After years of discussion, VBP became a reality on Oct. 1, 2012. At that time, hospitals with less than acceptable performance in providing timely and effective processes of care to patients admitted with acute myocardial infarction (MI), congestive heart failure (CHF), and pneumonia began seeing their annual Medicare payments for FY 2013 reduced by as much as 1%. Conversely, those hospitals with performance outcomes exceeding the Medicare threshold began receiving bonus payments of up to 1% of their annual Medicare payments. Payment bonuses and penalties will eventually reach 2% of all Medicare payments. For those providers unable to make the transition to pay-for-performance, the future will not be pretty. For our part, RC departments can help our hospitals prepare now for when COPD performance measures will be included in the pay-for-performance cycle. Adopting evidence-based care guidelines for inpatient COPD care is one important strategy in this regard.

Readmission reduction program

Another part of the ACA is directed at reducing the 30-day readmission rate for patients with chronic medical conditions. Under the traditional fee-for-service payment system, readmissions were viewed as a way to drive reimbursement income. Recent evidence suggests that approximately one in five Medicare patients are readmitted within 30 days of discharge and that such repeat admissions are largely avoidable.5 So, starting last October, Medicare began penalizing hospitals having excessive rehospitalization rates for patients initially admitted for acute MI, CHF, and pneumonia. For FY 2013, the penalty can be as much as 1% of a hospital’s annual Medicare payments. In 2014 the rate increases to 2% and then to 3% in FY 2015. As with pay-for-performance, COPD is soon expected to be added to the list of chronic diseases where excessive readmissions could prove to be very costly. Again, the time is right for RC departments to become active in a hospitalwide readmission reduction program for COPD patients.

Post-payment recovery audits

In an ongoing attempt to ensure care that is prescribed and rendered is indeed medically necessary, Medicare is conducting random post-payment audits of patient medical records. These audits are performed by outside consultants known as recovery auditors. Should a recovery auditor determine that a hospitalization was not justifiable or that the care prescribed and rendered during a hospital stay was not medically necessary, the hospital will receive a demand notice requesting repayment. Such demand notices for repayment can amount to hundreds of thousands of dollars, creating yet another financial hardship for hospitals, some of which are already barely getting by financially. One step RC departments can take to help protect our hospitals from the adverse consequences of recovery audits for COPD patients is to begin advocating for the application of evidence-based care. Regrettably, evidence suggests that evidence-based care for COPD patients is woefully underutilized, so there is a great opportunity to improve.6,7

Formation of Accountable Care Organizations

One of the newer evolving provider entities is the Accountable Care Organization, known as an ACO. Under this delivery model, hospitals, physicians, and other providers will join together to provide health and preventive/ wellness care to a defined patient population in a specified geographic locale. Medicare and other payors are looking to accountable care programs to close perceived gaps in care, reduce unnecessary emergency room visits, increase preventive health visits, and lead to better follow-up care following hospital discharge. By improving care coordination and meeting certain quality measures, it is anticipated that, overall, ACOs will actually provide better care at costs substantially lower than seen with traditional fee-for-service.

Given the pervasive incidence of chronic cardiopulmonary diseases — both as a primary and/or comorbid condition — this affords RC departments a golden opportunity to develop and implement suitable lung health outreach programs to help in the diagnosis, prevention, and management of chronic conditions so necessary for an ACO to be successful.

Transformation brings opportunity

There is no doubt that these are transformative times for the U.S. health care delivery system. However, with any great transformation comes opportunity; and for the respiratory care profession, health care reform offers the opportunity to expand and redefine our position in the health care provider hierarchy.


1. Centers for Medicare & Medicaid Services website. National health expenditure fact sheet. Available at: www.cms.gov/Research-Statistics- Data-and-Systems/Statistics-Trends-and-Reports/NationalHealth ExpendData//NHE-Fact-Sheet.html Accessed March 18, 2013

2. Institute of Medicine of The National Academies. Best care at lower cost: the path to continuously learning health care in America. September 2012.

3. Pew Research Social & Demographic Trends website. Cohn D, Taylor P. Baby boomers approach 65 – glumly. Available at: www.pewsocialtrends. org Accessed March 18, 2013

4. Centers for Disease Control and Prevention website. Chronic Diseases: The power to prevent, the call to control. Available at: www.cdc.gov/chronicdisease/resources/publications/aag/chronic.htm Accessed March 18, 2013

5. MedPAC website. Promoting greater efficiency in Medicare. 2007 Med- PAC report to the Congress. Available at: www.medpac.gov Accessed March 18, 2013

6. Lindenauer PK, Pekow P, Gao S, et.al. Quality of care for patients hospitalized for acute exacerbations of chronic obstructive pulmonary disease. Ann Intern Med 2006; 144(12):894-903.

7. Make B, Dutro MP, Paulose-Ram R, et al. Undertreatment of COPD: a retrospective analysis of US managed care and Medicare patients. Int J Chron Obstruct Pulmon Dis 2012; 7:1-9 (Epub 2012 Jan 18)

About the Author

Patrick J. Dunne, MEd, RRT, FAARC, is president of HealthCare Productions, Inc., in Fullerton, CA. He is also a trustee of the American Respiratory Care Foundation and an AARC representative to the International Council for Respiratory Care.