Revenue loss attributable to the PACT policy averages $700K annually per hospital, a sum far exceeding the average impact from the Readmissions Reduction, Hospital-Acquired Conditions, and Inpatient Value-Based Purchasing programs—combined.
Many organizations are unaware of the financial impact of PACT, but interest among hospital finance executives is growing given that revenue losses are concentrated in services also affected by Medicare's recently announced bundled payment programs, namely CJR and the Episode Payment Models. PACT appears to offer hospitals a path to directly inflect episodic spending in these programs, thus avoiding penalties. Nonetheless, our analysis indicates that deliberately triggering PACT payment reductions will be almost certainly harmful to hospitals.
Instead, given the risks that PACT poses to hospital margins, we recommend that hospitals develop a three-step strategy for minimizing PACT losses:
- Identify at-risk cases and estimate PACT revenue threat
- Establish care standards for PACT associated MS-DRGs that minimize post-acute utilization in cases where patients could be discharged to home instead
- Revise discharge coding to ensure that PACT payment reductions are not erroneously applied
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