Effects of payment reform in more versus less competitive markets

The Relative Importance of Hospital Discharge and Patient Composition in Changing Post-Acute Care Utilization and Outcomes Among Medicare Beneficiaries

Background

The COVID-19 pandemic changed care delivery. But the mechanisms of changes were less understood.

Objectives

Examine the extent to which the volume and pattern of hospital discharge and patient composition contributed to the changes in post-acute care (PAC) utilization and outcomes during the pandemic.

Research design

Retrospective cohort study. Medicare claims data on hospital discharges in a large healthcare system from March 2018 to December 2020.

Subjects

Medicare fee-for-service beneficiaries, 65 years or older, hospitalized for non-COVID diagnoses.

Measures

Hospital discharges to Home Health Agencies (HHA), Skilled Nursing Facilities (SNF), and Inpatient Rehabilitation Facilities (IRF) versus home. Thirty- and ninety-day mortality and readmission rates. Outcomes were compared before and during the pandemic with and without adjustment for patient characteristics and/or interactions with the pandemic onset.

Results

During the pandemic, hospital discharges declined by 27%. Patients were more likely to be discharged to HHA (+4.6%, 95% CI [3.2%, 6.0%]) and less likely to be discharged to either SNF (-3.9%, CI [-5.2%, -2.7%]) or to home (-2.8% CI [-4.4%, -1.3%]). Thirty- and ninety-day mortality rates were significantly higher by 2% to 3% points post-pandemic. Readmission were not significantly different. Up to 15% of the changes in discharge patterns and 5% in mortality rates were attributable to patient characteristics.

Conclusions

Shift in discharge locations were the main driver of changes in PAC utilization during the pandemic. Changes in patient characteristics explained only a small portion of changes in discharge patterns and were mainly channeled through general impacts rather than differentiated responses to the pandemic.

Changes in Therapy Utilization at Skilled Nursing Facilities Under Medicare's Patient Driven Payment Model

OBJECTIVES

The Patient Driven Payment Model (PDPM) was implemented in October 2019 to reimburse skilled nursing facilities (SNFs) based on Medicare patients' clinical and functional characteristics rather than the volume of services provided. This study aimed to examine the changes in therapy utilization and quality of care under PDPM.

DESIGN

Quasi-experimental design.

SETTING AND PARTICIPANTS

In total, 35,540 short stays by 27,967 unique patients in 121 Oregon SNFs.

METHODS

Using Minimum Data Set data from January 2019 to February 2020, we compared therapy utilization and quality of care for Medicare short stays before and after PDPM implementation to non-Medicare short stays.

RESULTS

The number of minutes of individual occupational therapy (OT) and physical therapy (PT) per week for Medicare stays decreased by 19.3% (P < .001) and 19.0% (P < .001), respectively, in the first 5 months of PDPM implementation (before the COVID-19 pandemic). The number of group OT and PT minutes increased by 1.67 (P < .001) and 1.77 (P < .001) minutes, respectively. The magnitude of PDPM effects varied widely across stays with different diagnoses. PDPM implementation was not associated with statistically significant changes in length of SNF stay (P = .549), discharge to the community (P = .208), or readmission to the SNF within 30 days (P = .684).

CONCLUSIONS AND IMPLICATIONS

SNFs responded to PDPM with a significant reduction in individual OT and PT utilization and a smaller increase in group OT and PT utilization. No changes were observed in length of SNF stay, rates of discharge to the community, or readmission to the SNF in the first 5 months of PDPM implementation. Further research should examine the relative effects of individual and group therapy and their impact on the quality of SNF care.

Geographic Variation in Medicare Fee-for-Service Health Care Expenditures Before and After the Passage of the Affordable Care Act

Question

Which categories of spending were associated with reductions in geographic variation of Medicare per-beneficiary spending across the US after the passage of the Affordable Care Act?

Findings

In this cross-sectional study of Medicare enrollees aged 65 years or older, geographic variation in Medicare fee-for-service spending per beneficiary was stable from 2007 to 2011 and then declined steadily from 2012 to 2018. A key factor associated with reduced geographic variation in spending was reduced variation in postacute care spending, specifically home health spending.

Meaning

These findings suggest that antifraud enforcement efforts and payment reforms that were instituted as part of the Affordable Care Act may have reduced geographic variation in Medicare fee-for-service per-beneficiary spending, although significant geographic variation remains.

Importance

Geographic variation in Medicare spending is often used as a measure of wasteful spending. A 2013 Institute of Medicine report found that postacute care was a key contributor of geographic variation from 2007 to 2009. However, payment reforms and antifraud efforts implemented after the passage of the Affordable Care Act (ACA) may have reduced geographic variation in spending, especially postacute care spending.

Objective

To investigate how geographic variation in Medicare fee-for-service per-beneficiary spending changed from 2007 to 2018 before and after passage of the ACA.

Design, Setting, and Participants

This cross-sectional study included all fee-for-service Medicare enrollees 65 years or older from January 1, 2007, to December 31, 2018. The fee-for-service Medicare Geographic Variation Public Use File was used to group hospital referral regions (HRRs) in each year into deciles (10 equal groups) based on per-beneficiary total spending. The difference between the per-beneficiary monthly spending in each decile and the national mean, as well as the ratio of per-beneficiary total spending in the top deciles to that of the bottom decile, were reported. Data analysis occurred from July 22, 2019, to October 21, 2021.

Main Outcomes and Measures

Per-beneficiary spending on hospital inpatient, hospital outpatient, physician, and postacute care (and type of postacute care).

Results

There were 27.2 million fee-for-service beneficiaries in 2007 (58.0% women) and 28.3 million beneficiaries in 2018 (55.9% women). Per-beneficiary Medicare spending was $9691 in 2007 and $9847 in 2018 (using inflation-adjusted 2018 dollars). Geographic variation in Medicare spending was stable from 2007 to 2011 and then declined steadily from 2012 to 2018. The ratio of per-beneficiary total Medicare spending in the HRRs in the top decile to the bottom decile was 1.68 in 2007 ($415 monthly difference in spending) but only 1.56 ($361 monthly difference in spending) in 2018 (estimated change, −0.12 [95% CI, −0.21 to −0.02]; P = .01). Focusing on specific spending categories, the only statistically significant reductions in geographic variation were found for home health; the ratio of home health spending among HRRs in the top to bottom deciles of total Medicare spending fell from 5.14 in 2007 to 3.45 in 2018 (change, −1.69 [95% CI, −3.30 to −0.09]; P = .04).

Conclusions and Relevance

Geographic variation in total per-beneficiary Medicare spending fell from 2007 to 2018, with home health spending being a key factor associated with geographic variation. The ACA’s value-based payment programs and enhanced integrity efforts in home health provide a possible explanation for the decrease.

Home Health Agencies: Empirical Evidence on the Patient-Driven Groupings Model’s Expected Effects on Agency Reimbursements

Beginning January 1, 2020, Medicare’s Patient-Driven Groupings Model (PDGM) eliminated therapy as a direct determinant of Home Health Agencies’ (HHAs’) reimbursements. Instead, PDGM advances Medicare’s shift toward value-based payment models by directly linking HHAs’ reimbursements to patients’ medical conditions. We use 3 publicly-available datasets and ordered logistic regression to examine the associations between HHAs’ pre-PDGM provision of therapy and their other agency, patient, and quality characteristics. Our study therefore provides evidence on PDGM’s likely effects on HHA reimbursements assuming current patient populations and service levels do not change. We find that PDGM will likely increase payments to rural and facility-based HHAs, as well as HHAs serving greater proportions of non-white, dual-eligible, and seriously ill patients. Payments will also increase for HHAs scoring higher on quality surveys, but decrease for HHAs with higher outcome and process quality scores. We also use ordinary least squares regression to examine residual variation in HHAs’ expected reimbursement changes under PDGM, after accounting for any expected changes related to their pre-PDGM levels of therapy provision. We find that larger and rural HHAs will likely experience residual payment increases under PDGM, as will HHAs with greater numbers of seriously ill, younger, and non-white patients. HHAs with higher process quality, but lower outcome quality, will similarly benefit from PDGM. Understanding how PDGM affects HHAs is crucial as policymakers seek ways to increase equitable access to safe and affordable non-facility-provided healthcare that provides appropriate levels of therapy, nursing, and other care.

Do financial incentives matter? Effects of Medicare price shocks on skilled nursing facility care

Skilled nursing facility (SNF) spending has been one of the fastest growing categories of Medicare spending over the past few decades, and reductions in SNF payments are often recommended as part of Medicare cost containment efforts. Using a quasi-experiment resulting from a policy-driven and facility-specific Medicare payment change, we provide new evidence on how Medicare payment changes affect the amount of SNF care provided to Medicare patients. Specifically, we examine a one-time, plausibly exogenous change in the hospital wage index, an area-level adjustment to SNF payments that affected the majority of SNFs nationwide. Using a panel dataset of SNFs, we model the effects of these payment changes on more than 12,000 SNFs across the United States. We find that increases in Medicare payment rates to SNFs increased the total number of Medicare resident days at SNFs. Specifically, a 5% payment increase raised Medicare resident days by 2.33% at facilities with a 10% Medicare share relative to 0%. Further, the effects were asymmetric: Although Medicare payment increases affected Medicare days, payment decreases did not. Our results have important implications for policies that alter the Medicare base payment rates to SNFs and other health care providers.

Impact of capitation on outpatient expenses among patients with diabetes mellitus in Tianjin, China: a natural experiment

OBJECTIVES

Capitation policy, a new medical insurance settlement method implemented on 1 January 2014 in Tianjin, China, aimed to control unreasonable increases in medical costs. The goal of the current study was to evaluate the impact of capitation on outpatient expenses among patients with diabetes mellitus and provide scientific evidence for health policy-makers.

DESIGN

A natural experiment.

SETTING

The medical insurance database of Tianjin from 1 January 2010 to 31 December 2014.

PARTICIPANTS

In total, 35 529 records were included, comprising 9646 records in the pilot group (4907 records in 2014 and 4739 records in 2013) and 25 883 records in the control group (9814 records in 2014 and 16 069 records in 2013).

MAIN OUTCOME MEASURES

The outcome variables included annual total outpatient expenses, drug expenses, examination expenses, treatment expenses and other expenses.

RESULTS

Capitation produced an increase in total outpatient expenses of ¥1993.76 (95% CI, ¥1643.74 to ¥2343.77) in the pilot group relative to the control group. There was also an increase in drug expenses of ¥1904.30 (95% CI, ¥1578.63 to ¥2229.96) after the implementation of capitation. An increase in examination expenses of ¥44.90 (95% CI, ¥19.11 to ¥70.68) was found in the pilot group versus the control group. Capitation also produced an increase in treatment expenses of ¥3.55 (95% CI, ¥1.01 to ¥6.09) and an increase in other expenses of ¥43.46 (95% CI, ¥26.81 to ¥60.11) in the pilot group versus the control group.

CONCLUSION

Compared with those who participated in the 'control' policy, outpatient expenses of patients enrolled in capitation increased significantly. The increases were due to the actual needs of patients, changes in drug directories, and the autonomy and independence of hospitals. It is necessary for the government, policy-makers, hospitals, doctors, patients and supervisory agencies to improve the capitation policy.