Medicare post-acute care episodes and payment bundling.

BACKGROUND: The purpose of this paper is to examine service use in an episode of acute and post-acute care (PAC) under alternative episode definitions and to look at geographic differences in episode payments. DATA AND METHODS: The data source for these analyses was a Medicare claims file for 30 percent of beneficiaries with an acute hospital initiated episode in 2008 (N = 1,705,794, of which 38.7 percent went on to use PAC). Fixed length episodes of 30, 60, and 90 days were examined. Analyses examined differences in definitions allowing any claim within the fixed length period to be part of the episode versus prorating a claim extending past the episode endpoint. Readmissions were also examined as an episode endpoint. Payments were standardized to allow for comparison of episode payments per acute hospital discharge or PAC user across states. RESULTS: The results of these analyses provide information on the composition of service use under different episode definitions and highlight considerations for providers and payers testing different alternatives for bundled payment.

Inpatient rehabilitation utilization for Medicare beneficiaries with multiple sclerosis.

OBJECTIVE: To explore the use of inpatient rehabilitation facility services and levels of impairment for Medicare beneficiaries with multiple sclerosis (MS) by comparing differences in service utilization and clinical characteristics between Medicare beneficiaries with MS to the overall Medicare population. DESIGN: Medicare beneficiaries with MS were identified using Medicare claims data. Claims and assessment data were analyzed to compare outcomes for beneficiaries with MS who used inpatient rehabilitation compared with a random sample of Medicare beneficiaries without MS. SETTING: Inpatient rehabilitation facilities. PARTICIPANTS: Medicare beneficiaries with a diagnosis of MS who received inpatient rehabilitation during the 2007 calendar year (n=4669) and a random sample of Medicare beneficiaries without MS (n=14,397). INTERVENTIONS: Not applicable. MAIN OUTCOME MEASURES: Change in functional impairment levels between admission and discharge to inpatient rehabilitation and length of stay. RESULTS: There were several differences in beneficiary characteristics between the 2 groups. Beneficiaries with MS had lower change in functional levels (-3.3 points on the FIM) and longer length of stay (0.4d). CONCLUSIONS: While beneficiaries with MS account for a small proportion of the Medicare population, the benefit is important to those who qualify for Medicare coverage. This study illustrates the differences between the subpopulation of beneficiaries with MS and other Medicare beneficiaries. The findings show that populations with MS had less functional improvement than other Medicare populations using the inpatient rehabilitation setting. Higher rates of depression within the MS Medicare population was a secondary finding that presents another important consideration for rehabilitation service needs for this group.

Making the system work for home care quality.

The post-acute and long-term care systems are changing rapidly, with an increasingly important role being played by home care. Under the current system, home care does not consistently meet the needs of older people living in the community. This problem is caused, in large part, by the existing system of financing and regulating home care. This paper examines how the current system funded by Medicare, Medicaid, state programs, private insurance, and out-of-pocket spending affects the delivery and quality of home care services. Specifically, this paper analyzes how financing, coverage of services, reimbursement, quality regulation and assurance, and information coordination affects the quality of home care. The paper concludes by drawing implications for policy.

Perspectives on the state-of-the-science in rehabilitation medicine and its implications for Medicare postacute care policies.

Better measurement of the case-mix complexity of patients receiving rehabilitation services is critical to understanding variations in the outcomes achieved by patients treated in different postacute care (PAC) settings. The Medicare program recognized this issue and is undertaking a major initiative to develop a new patient-assessment instrument that would standardize case-mix measurement in inpatient rehabilitation facilities, long-term care hospitals, skilled nursing facilities, and home health agencies. The new instrument, called the Continuity Assessment Record and Evaluation Tool, builds on the scientific advances in measurement to develop standard measures of medical acuity, functional status, cognitive impairment, and social support related to resource need, outcomes, and continuity of care for use in all PAC settings.

Impact of drug coverage on medical expenditures among the elderly.

Our study compares expenditures for Medicare covered medical services among enrollees in three State pharmacy assistance programs with spending among low-income residents eligible or near-eligible for, but not enrolled in such State-sponsored programs after controlling for between-group differences in demographic, socioeconomic, health status, and insurance status characteristics. We estimate a two-part model in total and by type of service (inpatient, outpatient, and professional) and chronic condition (hypertension, heart disease, and arthritis). We find that drug coverage has no discernible effect on the use and cost of inpatient services, but is associated with a statistically significant increase in Medicare spending for physician services.

Patient casemix classification for medicare psychiatric prospective payment.

OBJECTIVE: For a proposed Medicare prospective payment system for inpatient psychiatric facility treatment, the authors developed a casemix classification to capture differences in patients' real daily resource use. METHOD: Primary data on patient characteristics and daily time spent in various activities were collected in a survey of 696 patients from 40 inpatient psychiatric facilities. Survey data were combined with Medicare claims data to estimate intensity-adjusted daily cost. Classification and Regression Trees (CART) analysis of average daily routine and ancillary costs yielded several hierarchical classification groupings. Regression analysis was used to control for facility and day-of-stay effects in order to compare hierarchical models with models based on the recently proposed payment system of the Centers for Medicare & Medicaid Services. RESULTS: CART analysis identified a small set of patient characteristics strongly associated with higher daily costs, including age, psychiatric diagnosis, deficits in daily living activities, and detox or ECT use. A parsimonious, 16-group, fully interactive model that used five major DSM-IV categories and stratified by age, illness severity, deficits in daily living activities, dangerousness, and use of ECT explained 40% (out of a possible 76%) of daily cost variation not attributable to idiosyncratic daily changes within patients. A noninteractive model based on diagnosis-related groups, age, and medical comorbidity had explanatory power of only 32%. CONCLUSIONS: A regression model with 16 casemix groups restricted to using "appropriate" payment variables (i.e., those with clinical face validity and low administrative burden that are easily validated and provide proper care incentives) produced more efficient and equitable payments than did a noninteractive system based on diagnosis-related groups.

Variation in patient routine costliness in U.S. psychiatric facilities.

BACKGROUND: The Balanced Budget Refinement Act of 1999 included a Congressional mandate to develop a patient-level case mix prospective payment system (PPS) for all Medicare beneficiaries treated in PPS-exempt psychiatric facilities. Payment levels by case mix category have been proposed by the government based on claims and facility cost reports. Because of claims data limitations, these levels do not account for patient-specific staffing costs within a facility's routine units, nor are certain key patient characteristics considered for higher payment. AIMS OF THE STUDY: This study uses novel primary data to quantify heretofore unmeasured differences in daily staffing intensity on routine units among Medicare patients. The data are used to test for compression (or narrowing) in case mix payment weights that would result from using only Medicare claims and facility cost reports to quantify daily routine costliness. METHODS: Primary data on patient and staff times in over 20 activities were collected from 40 psychiatric facilities and 66 psychiatric units, nation-wide. Patient times were reported on all inpatients on each shift over a 7-day study period. A resource intensity measure (in Registered Nurse (RN)-equivalent minutes) was constructed on a daily basis for 4,149 Medicare and 4,667 non-Medicare patient days. The routine measure is converted into daily cost using cost report per diems and ancillary costs added using submitted claims. Descriptive tables isolate key cost drivers for Medicare patients. Classification and Regression Trees (CART) clustering identifies 16 potential case mix groups. Multivariate regression is used to compare case mix, day-of-stay, and facility effects using 4 alternative measures of daily routine and ancillary costs. RESULTS: Patient daily routine intensity of care is found to vary by a factor of 3 or more between the top and bottom 10% of days. Medicare patient days were 12.5% more staff intensive than non-Medicare days, which may have been due to age and other differences. Older dementia and "residual diagnosis" patients are more intensive while schizophrenia and substance-related patients are less intensive. Age, psychiatric and medical severity, deficits in Activities in Daily Living (ADLs), dangerous behaviors, and electroconvulsive therapy (ECT) also contribute substantially to higher staffing intensity. Other patient characteristics were insignificant within broad diagnostic groups. Routine costs based on a single facility per diem produced narrower case mix cost differences--often by a factor of 2 or more--for 10 of 12 groups with significantly higher costs. Adding patient-specific ancillary to uniform per diem costs only marginally decompressed costs. Day of-stay costs were similarly compressed when using only cost reports. DISCUSSION: Claims-based costing using Medicare cost reports unduly compresses (narrows) estimates of inter-group case mix cost differences. Also, by not capturing ADL deficits and dangerous behaviors, administrative data sets fail to identify small, but very resource intensive, patient groups. ECT treatment regimens, although rare, significantly increase costs on a daily basis. IMPLICATIONS FOR HEALTH POLICIES: Medicare's recently proposed prospective payment system for psychiatric inpatients uses claims-based costing methods based on widely available administrative data. Consequently, fewer high cost groups are identified due to non-reported patient characteristics such as ADL deficits. Moreover, inter-group relative cost differences are likely understated. It is also possible that any standardized dollar amount applied to group relative weights is understated because Medicare patients appear more intensive per day on routine units. IMPLICATIONS FOR FUTURE RESEARCH: Larger primary samples of special psychiatric units (e.g., med-psych, child/adolescent) could improve estimates of daily routine costliness. Larger samples could also support stronger tests of case mix and cost differences by facility type and teaching status. Medical records information on non-Medicare patients could quantify any systematic differences in average daily costs holding case mix constant. Similar primary studies of psychiatric patients treated outside PPS-exempt units in acute general hospitals could result in a fully integrated payment system for all mentally ill Medicare patients, thereby avoiding payment inefficiencies and inequities.

Characteristics of high staff intensive Medicare psychiatric inpatients.

Previous analyses of the costs of Medicare psychiatric inpatients have been limited by the use of claims and provider cost reports that fail to quantify differences in patient characteristics and routine costs. This article uses new primary data from 66 psychiatric inpatient units in 40 facilities nationwide to measure the times staff spend in therapeutic and other activities caring for Medicare patients. Patient days are divided into two groups of very high and low staff intensity and patient characteristics compared in each group. Results identify key patient characteristics associated with high staffing days, including old age, dementia and cognitive impairment, severe psychiatric diagnosis, deficits in activities of daily living (ADLs), and assaultive or agitated behaviors. Policy implications and suggested enhancements are made with regard to the proposed CMS case-mix classification system based on claims data alone.