Health care providers and employers across the U.S., including many in the Greater Houston area, are implementing strategies that aim to keep people healthier and out of hospitals.

Financial incentives initiated over the last few years as part of the Affordable Care Act, such as tax breaks for instituting employee wellness programs and increasing penalties for high patient readmission rates, are pushing both providers and consumers to look at health care from a preventive standpoint to save money on rising costs.

“Most of your health conditions or health care costs are the result of chronic health conditions,” said Chris Skisak, executive director of the Houston Business Coalition on Health. “The theory being, if you can prevent these chronic health conditions from manifesting themselves, you will impact the cost trend.”

Employers embrace wellness

Wellness programs are increasing in the Houston business scene, according to research from health care nonprofit Texas Business Group on Health. The group found that more than 70 percent of surveyed employers statewide offered some kind of wellness program in 2015, which is up from 58 percent in 2008.

Wellness programs continue to rise as business leaders attempt to recruit and retain talented employees who expect it as part of the benefits package, Skisak said.

“A part of it is recruitment, and a part of it is retention—especially for millennials,” he said. “They want to be able to have yoga classes and gym memberships. [Employee wellness program offerings are growing] more because everybody else has them.” 

Employers nationwide have been given a financial incentive from the federal government to offer additional employee wellness options. In 2014, a new ACA rule went into effect that allows employers to incentivize wellness programs by covering up to 30 percent of the total cost of an employee’s premium coverage for participating in a wellness program, according to the U.S. Department of Labor. The law previously allowed incentives to cover costs up to 20 percent.

These rules also allow for an increase of the maximum reward to as much as 50 percent of  an employee’s premium costs for programs designed to prevent or reduce tobacco use.

Large employers in The Woodlands area, such as Conroe ISD and Anadarko Petroleum Corporation, are also increasing their employee wellness output.

CISD’s Employee Health and Wellness Center offers health care services to employees and their dependents, such as primary care, preventive care, physical exams, vaccinations and chronic disease management. The center is located at 19675 I-45 S., Conroe.

Meanwhile, Anadarko offers an employee wellness program with an on-site fitness center and medical clinics for employees at its Woodlands headquarters in Town Center. The company has offered the services since the campus opened in 2003.

Reducing hospital readmissions

The Hospital Readmission Reduction Program was approved as part of the ACA in 2010. The first penalties went into effect in 2013. The program was designed to combat high readmission rates—the number of patients readmitted to a hospital within a month of treatment at that hospital—which add billions of dollars to the cost of treating Medicare patients because some readmissions are preventable.

About 2 million patients return to a hospital per year, costing Medicare $26 billion, according to the Centers for Medicare and Medicaid Services. Around $17 billion comes from potentially avoidable readmissions.

“Being readmitted to the hospital can be stressful, and it has implications on the care that [patients] were receiving in the hospital,” said Cristina Boccuti, associate director for the Kaiser Family Foundation, a national nonprofit that studies health policy analysis and reports about public health. “[Lower readmission rates] also may result in lower Medicare spending because hospitalizations are very expensive for Medicare. Reducing the readmission rate helps patients and Medicare.”

Hospitals are fined by the HRRP based on how they perform compared with national readmission rates over a three-year period.

The HRRP expects to levy fines totaling $528 million in penalties for the fiscal year 2016-17, up from $290 million in 2013 and $428 million in 2015, according to the Kaiser foundation. About 83 percent of hospitals nationwide received no penalty or a penalty of less than 1 percent of its Medicare payout, according to the Kaiser Foundation.

The Woodlands-area hospital CHI St. Luke’s Health will be fined nearly 1 percent of the funding received from Medicare in 2017, according to the Kaiser foundation. Data for Memorial Hermann The Woodlands Hospital was unavailable. 

“Health systems are only going to continue to be more and more challenged on how we keep people out of hospitals instead of admitting people—that’s sort of what our future has in store for us in terms of the health care industry,” said Heath Rushing, senior vice president and CEO of Memorial Hermann Northeast.

However, the penalties have increased as additional diagnoses of initial hospitalization are now tracked, and the maximum penalty—currently 3 percent of a hospital’s total Medicare payout—has increased from 1 percent in 2013, Boccuti said.

“Readmission rates have gone down nationally for Medicare patients,” Boccuti said. “The beginning of when they started declining was in 2012. They have inched down since then.”

Hospital systems adjust

With CMS adding conditions each year to the list of readmission penalizations, large hospital systems—such as Houston Methodist and Memorial Hermann—and individual hospitals are having to find new ways to address preventive care with patients.

Hospitals have been taking several steps to lower readmissions, such as clarifying patient discharge instructions as well as coordinating with post-acute care providers and the patient’s primary physician—steps that have shown success in reducing hospital readmissions, Boccuti said.

Janice Finder, director of Health and Performance Improvement at Houston Methodist, said programs have been developed to address the changing landscape of Medicare, specifically tailoring discharge plans to fit patient needs. Three years ago, Finder said Houston Methodist developed the Better Outcomes for Optimizing Safe Transitions program, which assessed what factors might bring a patient back to the hospital.

“This program helped us to take a look at each of our patients and families and their needs for transitions in care,” Finder said. “As a result, we also increased our efforts to recruit and retain primary care physicians so patients discharged from the hospital had a physician to regularly see.”

However, Finder said the hospital system will continue to explore ways to keep readmission rates down, not just to avoid penalties, but to ensure a quality experience for patients. Finder said Houston Methodist is focused on finding ways to make sure patients are informed about their conditions and ways to avoid returning before they leave the hospital.

“Education is essential,” she said. “During the hospital visit, the patients are often too sick to really learn, but 48 hours prior to discharge, we start to educate them and their family so by the time they are discharged, they understand.”