Heart failure (HF) is the only cardiac disease whose incidence and prevalence are increasing, a trend that threatens to impose an exponentially increasing burden on the health care system.^1,2 This burden impacts patients, providers, insurers, health care suppliers, and particularly hospitals, where the majority of health care is rendered to those with acute decompensated heart failure (ADHF).

Much progress has been made in the clinical treatment of HF with aggressive pharmacologic and device therapies, but the difficulty in treating these patients effectively while maintaining a healthy balance of economic viability is the goal of the acute care facility. Defining and implementing optimal care that is cost-effective and results in best clinical outcomes, quality of life, and satisfaction of patient and providers has been a challenge to the health care delivery system. As advances in technology add increasing costs to the treatment of HF patients, reimbursements remain limited and place the onus on the acute care facility to ensure the provision of cost-efficient care while maintaining a high of quality of care. As the population ages, the health care system will be forced to develop more innovative approaches to the care and treatment of patients with chronic diseases that are prone to exacerbations resulting in costly health care utilization.

HF is responsible for more elderly patient hospitalizations than any other disease¹ High readmission rates—20% at 30 days and 50% at 6 months—also contribute to the staggering figure: a total of 6.5 million hospital days are expended to treat ADHF.³ Hospital discharges for HF in 2001 were estimated to be approaching 1 million (Figure 5-1). In fact, HF is the most commonly used Medicare diagnosis-related group (DRG).⁴ The high utilization not only is reflected in the inpatient sector, this diagnosis also accounts for 12 to 15 million office visits annually.⁵ These utilization figures have continued on an increasing trend over the last 2 decades.

HF patients are considerably expensive patients as well and contributed to $25.8 billion in 2004 in direct and indirect costs to the United States.⁶ Compared with other cardiac conditions, HF accounts for more than 10% of total costs for all cardiovascular conditions (Table 5-1). Although charges for medications, provider fees, and nursing care contribute to these costs, the majority of the expenditures are related to acute hospitalizations (Figure 5-2). These figures substantiate the large health care burden of HF, both clinically and financially. Although these figures represent high-level economic views, the overall burden can easily be translated to the level of the individual hospital.

Currently, the majority of ADHF patients are treated in the inpatient environment. The emergency department (ED) is the point of entry for three out of every four ADHF patients, and 75% to 90% of HF patients presenting to the ED are ultimately admitted to the hospital.^7,8 Once admitted to the hospital, the average length of stay (LOS) is 7.0 days.⁹

After the Balanced Budget Act of 1997 and the Refinement Act of 1999, hospitals began struggling and continue to struggle with the Inpatient Prospective Payment System (IPPS) and the Outpatient Prospective Payment System (OPPS). Most facilities are reimbursed for ADHF patients on a fixed inpatient payment under the DRG system and must operate with optimal efficiency to maintain financial viability.

Placement of the ADHF patient in an inpatient bed can easily consume the average Medicare payment of $4,617 currently reimbursed for DRG 127 under the IPPS. With an average LOS of more than 5 days combined with the break-even point for most hospitals occurring at about 5 days, most hospitals are not adequately reimbursed to cover these costs.¹⁰ In a review of 2001 cost data, the average hospital lost $1,288 per ADHF patient.¹⁰ Such losses obviously represent a serious impact on a hospital’s operation and fiscal stability.

Another unique characteristic of reimbursement under Medicare affects the HF patient who has been recently discharged after an acute admission and is readmitted within 30 days. Nearly 20% of patients discharged from an acute hospitalization for exacerbation of congestive heart failure (CHF) are readmitted within 30 days, and 50% are readmitted within 6 months.^11,12 With repeat admissions within a 30-day period, payment is not guaranteed and potential audits could occur. Return visits create burden of proof on the facility with medical necessity to justify the return visit within 30 days. Medicare may not reimburse the hospital, and payment could be vulnerable at the expense of the facility. Because most HF patients are covered under Medicare, many hospitals are faced with a fiscal loss when rendering care to the ADHF patient under the current Medicare DRG reimbursement levels. The relative weight of DRG 127 (HF) is less than DRG 89 Pneumonia. Of course, the current practice patterns regarding inpatient admissions contribute to these fiscal problems. As hospitals are seeing increasingly ill patients, it is becoming more difficult to offset these losses by caring for other conditions. Therefore, acute care facilities are forced to find alternative solutions in providing quality care for ADHF in a fiscally sound manner.

In general, efforts in health care delivery are moving in the direction of providing more services in the outpatient setting. Care in such settings is commonly less costly and more efficient. As an example, chest pain centers (CPCs) again began to emerge in the late 1990s for patients presenting with chest pain, as a more efficient way of ruling out myocardial infarction in low-risk patient subsets. The method proved not only more logistically efficient but more cost-effective as well.

The Centers for Medicare and Medicaid Services (CMS) have now targeted chest pain, asthma, and HF for efforts to reduce morbidity and mortality through use of intense treatment in nonacute care settings. This strategy, coupled with the positive experiences gained from the CPCs, has led to the emergence of the observation unit (OU), a service provided “on-hospital premises, including use of a bed and periodic monitoring by nursing or other staff, which are reasonable and necessary to evaluate an outpatient’s condition or determine the need for possible admission as an inpatient.”¹³