Increasing Medicare revenues: the EverCare approach.

Seven years ago with the advent of Medicare capitation for HMOs, United HealthCare Corp., a leading managed care company, saw a new opportunity. With Medicare capitation, participating HMOs receive a lump payment of 95% of the average Medicare reimbursement in their area, which they then disperse to providers as needed. United developed a program called EverCare, designed to reduce Medicare costs while providing personalized geriatric medical care and case management to residents of nursing homes. As Medicare beneficiaries became older and sicker, more and more were admitted to nursing homes but continued to receive clinical care. This was the beginning of the subacute care boom that is gathering steam today in many nursing homes. Companies like EverCare were poised to ride the new wave, and nursing homes could, meanwhile, benefit from the growing infusion of Medicare money. Here is how the new collaboration is working out, as explained by EverCare's Jeannine Bayard in this interview with Nursing Homes Editor Richard L. Peck:

Peck: What are the benefits to nursing homes of working with a capitated Medicare program like EverCare?

Bayard: There are several. First, we work with the nursing home to carefully assess each EverCare patient's medical care needs and determine ahead of time how much Medicare will cover. There are no retroactive denials. Second, the nursing homes are not at risk; we pay billed charges, including ancillaries, based on the home's state-approved rates. Third, EverCare develops a network of physicians and nurse practitioners who specialize in care of the frail elderly and are trained to meet their unique needs. EverCare assigns a physician and nurse practitioner team to each nursing home to manage the care of all the home's EverCare patients. The nurse practitioner's job is to increase the level of attention given to residents by primary care providers in the nursing home. Thus residents are kept in the home and their days outside the home for clinical care are minimized. Fourth, our residents have one-hour access to a nurse practitioner on-call, and if necessary, the nurse practitioner can call in a physician who is also required to respond within an hour.

Peck: How is this nurse practitioner/physician team selected?

Bayard: The nurse practitioner must be certified as an adult or geriatric nurse practitioner and have practical experience with elderly patients. The physician must be a board-certified primary care physician, and preferably be certified for special competence in geriatrics, as well, and should of course have hospital privileges.

Peck: How does the EverCare team interact with the nursing home staff?

Bayard: At a minimum, the same way the nursing home staff interacts with their current physician staff, and also through in-services that the nurse practitioner is equipped to provide. To maintain good communication with the resident, the resident's family and the nursing staff, the team can hold regular conferences with all parties involved. We have had very positive experiences with nursing homes staffs in this way.

Peck: What sort of resident services do you provide?

Bayard: For our members, who are Medicare Part A- and Part B-eligible, we provide a comprehensive history and physical examination conducted by the nurse practitioner and the physician. We review the records, the problem lists, the medications and the medical treatment plan. There is a family conference scheduled at the end of the comprehensive evaluation to discuss advanced directives.

We also bring specialty physicians into the nursing home for necessary evaluations and procedures. They are the types of specialist who don't require high-tech equipment for their work, such as neurologists, dermatologists, geriatric psychiatrists, ophthalmologists and even surgeons for post-op care. They make these visits, first, because it is much more convenient for them to manage these chronically disabled patients in the nursing home than in their offices, and second, because we reimburse them and the physicians on the primary care team better than Medicare.

I would add that, since all of this is done through an HMO, no paperwork is required of residents or providers.

Peck: What is your approach to hospitalization?

Bayard: Basically, we try to respect residents' and families' wishes on this. Many do not want to be hospitalized; others do, but we are able to minimize length-of-stay. Hospitalizations for EverCare seniors, whose average age is 89, average 4.6 days, compared to a national average of 12 days per stay, and are at only one-third the national average of total hospital days per year. To alleviate unnecessary hospitalization, the EverCare team sees their patients more often, enabling them to detect and treat problems early. This helps residents to stay in the nursing home in a familiar setting, around familiar people, and allows us to deliver as much care as we can in the nursing home.

We try to support nursing homes in their efforts to deliver subacute care. For example, with infusion therapy, we can pay nursing home staff, if they are trained, or augment their staff with trained IV therapists, if necessary. Over the past seven years, we have found that nursing homes' subacute care capabilities have increased to a much higher level, although they range widely from home-to-home. If necessary, we are also able to refer the resident to a nursing home that provides subacute services, and then transfer them back when the service is no longer necessary. As an HMO, we are able to waive the three-day hospital stay requirement.

In general, under capitation, we have a great deal of flexibility to deliver medical care in a variety of ways.

Peck: How does this capitation system work?

Bayard: We receive the Medicare payment, the 95% AAPCC, as it's called, plus a premium. Working through an HMO, we pay nursing homes' billed charges and physicians' fees-for-service. None of the providers are at risk, EverCare is. We try to minimize our risk through volume, on the grounds that the expense of caring for patients will be less than the capitated amount. In general, volume is necessary to making any capitated system work.

Peck: How do you envision the future of long-term care financing?

Bayard: I think EverCare will serve as an innovative model. We have just received approval from the Health Care Financing Administration (HCFA) to conduct a national demonstration in nine cities. The demonstration is expected to save Medicare over $5 million. We estimate that such a program applied to all permanent nursing home residents in the nation could reduce Medicare costs by as much as $800 million a year. The EverCare approach has the potential, therefore, to make a significant impact on the cost-effectiveness and quality of care for the nursing home population.