Integrating Nursing Home Care in Managed Care

By Penna, Richard D. Della | Generations, Summer 1999 | Go to article overview
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Integrating Nursing Home Care in Managed Care


Penna, Richard D. Della, Generations


Twenty years ago, the level of care delivered in nursing homes was easily distinguished from that provided in acute-care hospitals. Nursing homes assisted and supported elderly "custodial" residents with activities of daily living and provided maintenance care for chronic stable medical conditions. They did not generally care for their residents when they developed acute illnesses and required more intensive medical treatment and nursing services. Residents who became ill were sent to the hospital for that care. Financial incentives for physicians and hospitals encouraged this process and reinforced the status quo. There was little motivation for nursing homes to develop the capacity to care for acutely ill residents or for physicians to manage their illness in the nursing home setting. Hospitals, reimbursed on a per-diem basis, were willing providers of acute care for nursing home residents, and physicians received higher reimbursement when caring for their patients in the hospital. Hospitals provided required medical treatment to nursing home residents until therapy was completed. Of course, some geriatricians called for a different model (e.g., Ouslander, 1988; Olsen et al., 1993).

In the first half of the 1980s, two modifications in the financing of healthcare acted as catalysts for the process that changed the ability of nursing homes to provide higher acuity care. These changes were Medicare's prospective payment system to reimburse hospitals for treatment for beneficiaries and the introduction of capitated payments to health maintenance organizations for Medicare patients (also referred to as Medicare "risk contracting" or "risk plans"). As a result of these changes, today many nursing homes provide "subacute" or "super-skilled" care that previously could only be provided by hospitals. In the past, for example, nursing home residents typically received treatment for pneumonia and urinary tract sepsis only in the hospital. Now residents regularly receive treatment for these conditions in the nursing home.

These changes also have affected the. way community-dwelling elders may receive care for acute problems. An increasing number of them receive all or most of care for acute illness in a nursing home rather the hospital. Treatments for some serious illnesses may begin in the hospital but often are completed in the nursing home. Some community-dwelling elders with problems such as dehydration or compression fracture are commonly evaluated in an emergency department and then sent to a nursing home for treatment, with no hospitalization.

This care path, however, is premised, first, on nursing homes having developed the capability to safely manage these admissions and, second, on physician willingness and time to direct care in the nursing home.

Policy makers and health plans envisioned medicare managed care as an opportunity for better integration of care for the elderly. Capitation would remove barriers and allow health plans and providers to become more efficient in providing seamless care for elders. Efficiency not only meant eliminating fragmentation and waste but actually improving care and continuity. However, these outcomes are yet to be demonstrated (Wagner, I996). Medicare risk plans vary greatly in the way they organize the components of their delivery systems. At one end of the spectrum are health plans that contract for all care and services with multiple providers and vendors. At the other end are staff and group practice organizations in which all care is provided within a single system of care.

An overview of Medicare managed care today finds that some positive changes have occurred. These include improved benefits such as medication and dental coverage coordinated programs for influenza immunization, disease management coordination, and programs specifically for frail elders. However, Medicare managed care has not by and large met the fundamental challenge of minimizing or eliminating the fragmentary nature of care delivery.

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