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Transitional Care Models for the Elderly: Exploring Potential for Pay for Success (PFS) Opportunities for Third Sector Capital Partners

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Transitional Care Models for the Elderly: Exploring Potential for Pay for Success (PFS) Opportunities for Third Sector Capital Partners Transitional Care Models for the Elderly: Exploring Potential for Pay For Success (PFS) Opportunities for Third Sector Capital Partners Ashley Zlatinov May 2015 M-RCBG Associate Working Paper Series | No. 45 The views expressed in the M-RCBG Fellows and Graduate Student Research Paper Series are those of the author(s) and do not necessarily reflect those of the Mossavar-Rahmani Center for Business & Government or of Harvard University. The papers in this series have not undergone formal review and approval; they are presented to elicit feedback and to encourage debate on important public policy challenges. Copyright belongs to the author(s). Papers may be downloaded for personal use only. Mossavar-Rahmani Center for Business & Government Weil Hall | Harvard Kennedy School | www.hks.harvard.edu/mrcbg Transitional Care Models for the Elderly Exploring Potential for Pay For Success (PFS) Opportunities for Third Sector Capital Partners Ashley Zlatinov, MPP 2015 March, 2015 Faculty Advisors: Jeff Liebman and John Haigh This PAE reflects the views of the author(s) and should not be viewed as representing the views of the PAE's external client(s), nor those of Harvard University or any of its faculty. Table of Contents ACKNOWLEDGEMENTS ........................................................................................................................ 3 EXECUTIVE SUMMARY ......................................................................................................................... 4 CHAPTER 1: ELDERLY TRANSITIONAL CARE READMISSIONS COSTS AND RISKS ............ 7 CHAPTER 2: EXISTING TRANSITIONAL CARE INTERVENTIONS ........................................... 11 CHAPTER 3: OPTIONS FOR THIRD SECTOR CAPITAL PARTNERS ....................................... 17 CHAPTER 4: CASE STUDIES OF POTENTIAL PFS MODELS ...................................................... 22 THE TRANSITIONAL CARE MODEL .......................................................................................................... 22 THE COORDINATED TRANSITIONAL CARE (C-TRAC) PROGRAM .......................................................... 29 CHAPTER 5: RECOMMENDATIONS AND CONCLUSION ............................................................ 36 APPENDICES .......................................................................................................................................... 39 APPENDIX A: GOVERNMENT INTERVENTIONS .......................................................................... 40 APPENDIX B: STAKEHOLDERS AND FUNDERS ........................................................................... 44 APPENDIX C: TRANSITIONAL CARE INTERVENTION MODELS ............................................. 47 APPENDIX D: PRIMER ON MEDICAID AND MEDICARE ............................................................ 51 CITATIONS ............................................................................................................................................. 54 2 Acknowledgements I would like to thank the many individuals who graciously contributed their time and insights to this report. In particular, I appreciate the wise advice and support of my Harvard Kennedy School Advisors, Jeff Liebman and John Haigh, throughout the research and writing of this project. I would also like to thank Mary Naylor, Amy Kind, and their teams at the University of Pennsylvania and University of Wisconsin for providing interviews and follow-up data surrounding the Transitional Care Model and C- TraC/COMPASS models. I am also grateful for the advice of Boyd Gillman at Mathematica Policy Research regarding transitional care models and evaluation. Finally, a large thank you to Tim Pennell at Third Sector Capital Partners, Inc. for providing me with background information, draft advice, and support throughout the research process. 3 Executive Summary The Problem Transitional care, defined as the health care system in which a patient’s care shifts from one care setting to another, is often poorly managed in the United States, leading to diminished health and high costs. Nearly one in five Medicare patients discharged from the hospital—approximately 2.6 million seniors—is readmitted within 30 days1, at a Medicare annual cost of $15-26 billion.2 Officials estimate that up to $17 billion dollars a year comes from avoidable hospital readmissions.3 While hospital readmissions have declined over the past few years due to federal involvement and incentives (Appendix A), much more can be done to coordinate care, improve outcomes, and understand drivers of impact. The Potential Pay for Success (PFS) models are rapidly emerging as innovative approaches to accelerate social change, allowing government to partner with the private sector to drive performance-driven social outcomes. PFS is an innovative contracting and financing model that leverages private capital to fund social services, with the government paying only if proven results are achieved. Third Sector Capital Partners, Inc. (Third Sector), a leading nonprofit PFS advisory firm, has advised and led PFS projects in recidivism, social justice, asthma, and homelessness, and is interested in continuing to explore social sector areas with high needs and costs but little government involvement, funding, and/or performance-driven goals. Given the high costs and care fragmentation and the potential for savings and impact, Third Sector is interested in exploring if and how transitional care models for the elderly may be developed in the PFS arena. Furthermore, Third Sector is interested in pursuing the larger goal of learning how healthcare, with unique federal government involvement not necessarily seen in other PFS project areas, may be approached with PFS models. With the large influx of government funding already in transitional care, PFS may be particularly well suited to expand performance-driven learning and provide a better understanding of transitional care outcomes to ultimately better align a fragmented health system. 1 Jencks, Williams, and Coleman, 2009. 2 Medicare Payment Advisory Commission, Report to the Congress: Reforming the Delivery System, (Washington, D.C.: MedPAC, June 2008. RWJ. “Revolving Door: A Report on U.S. Hospital Readmissions.” February 2013. 3 Rau, 2014. 4 Outline of Report This report will provide an analysis of the transitional care landscape, examining the multitude of care interfaces, current government involvement, and potential interventions through the PFS lens. Due to the lack of rigorous evaluative results from current transitional care models (public results from the government-sponsored transitional care models will be released at the end of 2015), future government funding and involvement in this field is uncertain, and thus this report will not attempt to construct a specific PFS project model. Rather, this report aims to 1) examine key cost drivers and populations for potential PFS targeting; 2) examine and compare current intervention models; 3) present options for Third Sector’s involvement; 4) explore two case studies as potential partners for PFS; and 5) provide recommendations for Third Sector. A robust Appendix at the end of this report explores current government involvement in the transitional care field, relevant stakeholders and funders, and additional background resources and methodology. The transitional care arena is large and complex; and most studies, initiatives, and research focuses on hospital readmissions and preventable admissions as a proxy for measuring transitional care efficacy and gaps. This report will thus focus on transitions that include a hospital or medical facility as one of the transition interfaces, both to ensure the availability of robust quantitative data (rather than still undeveloped qualitative data, such as patient and caregiver satisfaction) and to maximize cost savings and proven impact. Options and Recommendations for Third Sector Capital Partners, Inc. Several options are available for Third Sector regarding PFS transitional care interventions for the elderly. These options are not mutually exclusive, and provide an array of opportunities for embracing PFS in this field. Option 1: Embrace Third Sector Performance Solutions Agenda: Transitional care interventions could fall under Third Sector’s emerging “performance solutions” arm, under which Third Sector could provide technical assistance to hospitals and Medicare to evaluate programs and track appropriate outcomes. By raising capital (similar to SIF or workforce development funds) to provide outcome-based technical assistance, Third Sector could spearhead the concept of performance-driven feedback loops in government transitional care initiatives. 5 Option 2: Wait until 2016. Before pursuing PFS models in this field, Third Sector may choose to wait until the CCTP Innovation pilot results are released in early 2016. Based on the results of current state-based innovative initiatives and CMS’ plans moving forward, Third Sector will be better positioned to make fully informed, decisive actions. Option 3: Begin Engagement with The Transitional Care Model (TCM) and/or C- TraC. Third Sector could decide to stay ahead of the curve and begin initial development of a PFS model. Both the Transitional Care Model and C-TraC models meet basic PFS readiness criteria and may present potential for long-term savings. Option 4: Explore transitional care unrelated to elder population. While outside the scope of this report, reducing hospital readmissions among non-elderly populations will yield
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