[Content for this post was prepared by Harshika Satyarthi]

Many recent applicants for 3026 funding say that calculating the blended rate is one of the most confusing elements in completing the budget worksheet for the Community-Based Care Transitions Program. As mentioned in our previous blog (http://medicaring.org/2011/07/11/tips-on-blended-rate-for-3026-applicants/), potential applicants found that calculating the proposed budget requires certain assumptions in order to arrive at: A) the number of Medicare fee-for-service patients who will be admitted in total, B) the proportion of patients planners think will be eligible for the intervention and C) the number of eligible patients who will actually go through with the intervention. Calculating these numbers will likely require you to estimate from results acquired from previous care transitions models. These calculations need to be rigorous to prevent underestimating the blended rate, a mistake that could lead you to lose money.

Blended rate is basically a pooled rate that either blends the varying elements of one intervention approach into one fee, or a rate that blends multiple intervention approaches into one fee. This rate is the number that goes into Row E of the 3026 budget worksheet provided by CMS.

Following is an example of how to calculate blended rate for the 3026 budget worksheet.

**Example:**

Suppose your intervention (Model 1) targets heart failure patients. You can categorize these eligible patients into three segments: low-, medium-, and high-risk. Assume that as the risk level increases, so does the time and cost of your intervention. However, you have to arrive at a “per eligible discharge” rate that reflects a fair fee for anyone in any of the three patient segments.

So taking the above example, let us assume the following costs and volume (this example uses very high costs, just to illustrate the computations):

Volume | Cost of each intervention | Total Cost | ||

Low-risk | 80 | $500 | $40,000 | |

Medium-risk | 420 | $700 | $294,000 | |

High-risk | 500 | $1000 | $500,000 | |

Blended rate = |
Total Cost/Total Volume |
$834,000/1000 |
$834 |

For each input that goes into the blended rate, you need to make your assumptions and data explicit.

Let’s take the example of the low-risk patient population. To arrive at the volume, you should be able to accurately predict the number of patients who would be 1) eligible for the intervention and 2) would agree to the intervention.

So the calculation for the volume can be done in the following way for low-risk targets:

- Total number of patients eligible for the intervention: 1000
- Proportion of eligible patients who belong to the low-risk pool: 40%
- Proportion of patients from the low-risk pool we expect to refuse the intervention: 80%
- Total number of low-risk patients who are eligible and will accept the intervention = 1000 x 40% x 20% = 80

A few things to consider when calculating the blended rate:

- Characteristics of the target population. Are they low-risk or high-risk and how this will affect your intervention cost?
- Things that you might consider when calculating the cost of each intervention:
- Personnel – salary, % of time spent on intervention, cost of recruitment and turnover, etc.*

- Expected refusal (or acceptance) rate for the intervention (this can be derived from a previous care transition project)
- Remember to provide explanations or footnotes for any assumptions made

As always we are very interested in your experience and thoughts. Please respond to this blog, or send along info to [email protected].

*This information was updated on November 18; please note that IT costs CANNOT be included in your calculation. Previous information posted here was incorrect on this point. We apologize for that error.

Key words: care transitions, blended rate, section 3026, hospital readmissions, budget worksheet, per eligible discharge rate

[…] call a “modified Coleman Model.” The same blog in a slightly earlier post ran an interesting piece on developing a “blended” per person rate as required by the Section 3026 budget […]