NR 552 Week 8 Policy Recommendation Memo Example

Memorandum

To: Chief Nursing Officer and Chief Financial Officer

From: MSN student, Cardiac Services Nursing

Date: Month Day, Year

Re: Funding a 12-month heart failure transitional care pilot without reducing orthopedic home visits

Recommendation

I recommend that you approve one additional registered nurse position in the home health agency and a half-time program coordinator for a 12-month pilot of a 30-day transitional care program for patients discharged home after heart failure, and that the finance office negotiate a per-patient fee of $452 with the regional Medicare Advantage plan, tied to a readmission target. The pilot would enroll an estimated 290 patients in its first year across all payers. The new nurse position is the part of this request that only the two of you can approve, and it is what keeps the program from displacing care for patients recovering from joint replacement.

The Problem

About 22% of our heart failure patients discharged home are readmitted within 30 days. That rate exposes the hospital to reduced Medicare payments under Medicare's readmissions penalty program, whose target conditions include heart failure (McIlvennan et al., 2015), and it reflects avoidable harm to patients. Cardiology has proposed a nurse-led program of one home visit within 72 hours and four weekly calls. The home health agency's six nurses are at capacity, so running the program within current staffing would move about 480 early visits a year away from other patients, mainly those home after hip and knee replacement.

Options

Four options were compared on the same basis: cost per 100 patients enrolled, 30-day readmissions avoided per 100, who pays and what care is displaced.

Option A: No change. No program cost. Readmission rate stays at 22%. No displacement. The hospital continues to face readmission penalties and forgoes a likely improvement for patients.

Option B: Run the program within current staffing. Program cost about $45,150 per 100 patients, mostly nurse time already on the payroll. Estimated 5.5 readmissions avoided per 100. Displaces about 480 early orthopedic visits a year, delaying first visits after joint replacement from two days to three or four.

Option C: Run the program with one added nurse and a half-time coordinator (recommended). Same cost per 100 patients as Option B in accounting terms, but funded by new positions: roughly $120,000 a year for the nurse and $52,000 for the coordinator, with about $14,000 for training and software. Same readmission effect. No displacement. Partly offset by the plan's per-patient fee.

Option D: Telemonitoring instead of home visits. Cost about $62,000 per 100 patients. Estimated 2.2 readmissions avoided per 100. Requires less nurse time but, on current evidence, avoids fewer readmissions at a higher cost per readmission avoided, about $28,200 against $8,200 for home visits.

Why Option C

It is the most effective option per dollar. In the cost-effectiveness comparison, nurse home visits avoided more readmissions than telemonitoring at lower cost, and from the payer's perspective saved about $34,600 per 100 patients after readmission offsets.

It has randomized evidence behind it. A randomized trial of a more intensive nurse-led transitional care program for older adults with heart failure found fewer readmissions (104 against 162) and lower mean total costs per patient over a year (Naylor et al., 2004). Our program is shorter, so we have assumed a smaller effect, a 25% relative reduction, rather than the trial's.

It avoids a hidden cost. Option B looks cheaper only because the displaced orthopedic visits do not appear in the program budget. Option C makes that cost visible and pays it.

Someone else can share the cost. The Medicare Advantage plan insures about 58% of our eligible patients and would save money under the program in the base case, about $58,000 in year one rising to $94,000 in year three, after paying the $452 fee. A fee agreement would return about $76,000 to the hospital in year one, and more as enrollment grows.

Risks

The effect may be smaller than assumed. If the program reduces readmissions by only 12%, the plan would lose money at a $452 fee, and the pilot would not pay for itself from the plan's perspective. The break-even effect for the plan is about 14%. For that reason, the fee agreement should include a performance clause.

Hospital revenue. Under fee-for-service Medicare, each avoided readmission is lost admission revenue as well as a reduced penalty. Finance should model this before the pilot begins. The recommendation stands on patient benefit and the plan's savings, but you should know that the hospital's own margin may not improve.

Recruitment. Home health nurse vacancies have taken seven to nine months to fill. If the position is not filled within three months, the pilot should start with a smaller cohort rather than drawing on orthopedic visits.

What Success Looks Like

At 12 months, the pilot should show a 30-day readmission rate among enrolled patients at least 14% lower, in relative terms, than the 22% baseline, no increase in time to first home visit for joint replacement patients, and enrollment of at least 70% of eligible patients. The cardiac services nurse manager would own the measures and report quarterly. If the readmission target is missed, the program would be revised or ended at the 12-month review.

Decision Requested

Please approve, by the end of this budget cycle, one registered nurse position and a half-time coordinator for a 12-month pilot, and authorize the finance office to negotiate the performance-linked fee with the Medicare Advantage plan. I can provide the full cost-effectiveness comparison and budget impact projection, prepared using standard budget impact methods (Sullivan et al., 2014), before your next meeting.

References

McIlvennan, C. K., Eapen, Z. J., & Allen, L. A. (2015). Hospital Readmissions Reduction Program. Circulation, 131(20), 1796-1803. https://doi.org/10.1161/CIRCULATIONAHA.114.010270

Naylor, M. D., Brooten, D. A., Campbell, R. L., Maislin, G., McCauley, K. M., & Schwartz, J. S. (2004). Transitional care of older adults hospitalized with heart failure: A randomized, controlled trial. Journal of the American Geriatrics Society, 52(5), 675-684. https://doi.org/10.1111/j.1532-5415.2004.52202.x

Sullivan, S. D., Mauskopf, J. A., Augustovski, F., Caro, J. J., Lee, K. M., Minchin, M., Orlewska, E., Penna, P., Rodriguez Barrios, J.-M., & Shau, W.-Y. (2014). Budget impact analysis: Principles of good practice: Report of the ISPOR 2012 Budget Impact Analysis Good Practice II Task Force. Value in Health, 17(1), 5-14. https://doi.org/10.1016/j.jval.2013.08.2291