Effects of institutional services and characteristics on use of postacute care settings

Postacute care under Medicare may be provided in several institutional settings, some of which function as substitutes for each other, including rehabilitation care in either specialty hospitals and hospital units excluded from Medicare PPS or skilled nursing facility care. This study uses Medicare billing data to examine institution-based postacute care utilization for beneficiaries' hospital episodes occurring from February 1, 1992 through June 30, 1992. Data on inpatient and postacute Part A services used by Medicare inpatients receiving care in rehabilitation facilities or skilled nursing facilities are presented. The results indicate that, even after casemix is controlled for, inpatient stay treatment variables affect postacute care utilization patterns. Nonclinical factors such as age and sex also affect choice of postacute care site.     

Evidence on the efficacy of inpatient spending on Medicare patients

Context: It is widely believed that a significant amount, perhaps as much as 20 to 30 percent, of health care spending in the United States is wasted, despite market forces such as managed care organizations and large, self‐insured firms with a financial incentive to eliminate waste of this magnitude. Methods: This article uses Medicare claims data to study the association between inpatient spending and the thirty‐day mortality of Medicare patients admitted to hospitals between 2001 and 2005 for surgery (general, orthopedic, vascular) and medical conditions (acute myocardial infarction [AMI], congestive heart failure [CHF], stroke, and gastrointestinal bleeding). Findings: Estimates from the analysis indicated that except for AMI patients, a 10 percent increase in inpatient spending was associated with a decrease of between 3.1 and 11.3 percent in thirty‐day mortality, depending on the type of patient. Conclusions: Although some spending may be inefficient, the results suggest that the amount of waste is less than conventionally believed, at least for inpatient care.     

Adequate Access to Posthospital Home Health Services: Differences Between Urban and Rural Areas

The health care environment in rural areas changed dramatically in the 1980s. Policy-makers are concerned that these changes have reduced access to care among residents of rural areas. This study measures adequate access to Medicare home health services and determines whether it differs for urban and rural beneficiaries. Adequate access to care is measured by whether a patient with a specific health condition received a level of skilled services predetermined as appropriate for that condition. The predetermined levels of care were developed in an earlier study and were found to correlate with adverse outcomes. This study focused on patients with diabetes mellitus and surgical hip procedures to concentrate on access to skilled nursing services and physical therapy services. To conduct the analysis, a data base was constructed that included both patient utilization and health status data, drawing on three different data sources: Medicare hospital claims data, Medicare home health bill record data, and home health plan of treatment data from patients' utilization review forms (forms 485 and 486). The analysis samples consisted of 404 patients with diabetes and 876 patients who had surgical hip procedures. Significant differences were found between urban and rural areas in access to home health services. The largest differences were found in access to physical therapy services, but differences in access to skilled nursing services also exist. The data suggest that the availability of skilled care services may cause these differences.     

Medicare home health utilization as a function of nursing home market factors.

Rapid increases in the size and costs of the home health market, unknown impacts of Medicare's DRG hospital reimbursement on the posthospital market, and general lack of knowledge about factors that explain interstate variation in home health utilization all suggest the importance of developing and testing models of Medicare home health use. This article proposes and tests a model of state home health utilization as a function of the nursing home market. This model proposes that home health utilization is a function of nursing home bed capacity, of the utilization of nursing home beds by Medicaid patients, of other demand factors, and of supply factors. This model is supported by the data. Specifically, Medicare home health use in the 1978-1984 period was found to be negatively related to nursing home bed stock, positively related to Medicaid nursing home utilization, and related to several other supply and demand factors, as hypothesized by the model. The further model assumption that home health utilization does not affect the nursing home market could not be tested in this analysis, but will be addressed in future research by the authors.     

Differences in U.S. hospital service utilization between traditional Medicare and Medicare HMO patients

This study examines the differences between traditional U.S. Medicare and Medicare HMO Florida inpatient hospital utilization during the years 1992-1998, using nine high volume Diagnosis Related Groups. Utilization was measured by the number of ancillary services consumed, as well as the charges for those services. The analyses controlled for differences in utilization due to patient age, race, hospital size, year and market differences in hospital costs. Patient data were severity-adjusted and the analysis focused on the patients at the highest severity level. The study found that Medicare HMO patients with chronic diseases at the highest severity of illness level consumed significantly more services than traditional Medicare patients with the same chronic diseases. It was concluded that these Medicare HMO patients were either sicker (despite the severity adjustment) than the traditional Medicare patients and/or Medicare HMOs used different production processes than traditional Medicare, perhaps in order to minimize length of stay. Medicare HMO patients with acute illnesses at the highest severity level did not, in general, consume significantly more services than traditional Medicare patients at the same level of severity for the same diagnoses. The results imply that Medicare policy with regard to HMO expansion may not result in cost savings, and may, instead, result in higher costs if the proportion of the Medicare population hospitalized with chronic illnesses increases.     

Is travel distance a barrier to veterans' use of VA hospitals for medical surgical care?

Lengthy travel distances may explain why relatively few veterans in the United States use VA hospitals for inpatient medical/surgical care. We used two approaches to distinguish the effect of distance on VA use from other factors such as access to alternatives and veterans' characteristics. The first approach describes how disparities in travel distance to the VA are related to other characteristics of geographic areas. The second approach involved a multivariate analysis of VA use in postal zip code areas (ZCAs). We used several sources of data to estimate the number of veterans who had priority access to the VA so that use rates could be estimated. Access to hospitals was characterized by estimated travel distance to inpatient providers that typically serve each ZCA. The results demonstrate that travel distance to the VA is variable, with veterans in rural areas traveling much farther for VA care than veterans in areas of high population density. However, Medicare recipients also travel farther in areas of low population density. In some areas veterans must travel lengthy distances for VA care because VA hospitals which were built over the past few decades are not located close to areas in which veterans reside in the 1990s. The disparities in travel distance suggest inequitable access to the VA. Use of the VA decreases with increases in travel distance only up to about 15 miles, after which use is relatively insensitive to further increases in distance. The multivariate analyses indicate that those over 65 are less sensitive to distance than younger veterans, even though those over 65 are Medicare eligible and therefore have inexpensive access to alternatives. The results suggest that proximity to a VA hospital is only one of many factors determining VA use. Further research is indicated to develop an appropriate response to the needs of the small but apparently dedicated group of VA users who are traveling very long distances to obtain VA care.     

Factors contributing to practice variation in post-stroke rehabilitation.

OBJECTIVE: To analyze geographic variability in the utilization and cost of post-stroke medical care using multiple linear regression. DATA SOURCES/STUDY SETTING: A 20 percent random sample of Medicare beneficiaries with an admission to an acute care hospital for stroke during the first six months of 1991, supplemented by data from their Medicare claims and beneficiary records, the Medicare Cost Reports for hospitals and nursing homes, and the Area Resource File. STUDY DESIGN: Weighted least squares regression is used to analyze variations in post-stroke practice patterns across 151 MSAs (Metropolitan Statistical Areas). Average post-stroke costs, utilization rates, and facility lengths of stay are regressed on patient and market characteristics. DATA COLLECTION/EXTRACTION METHODS: For a six-month post-stroke interval, beneficiary-level post-stroke costs and service utilization are averaged by MSA. Variables describing market conditions are then added to these MSA-level records. PRINCIPAL FINDINGS: Patient variables rarely explain more than a third of practice variation, and often they explain substantially less than that. Market variables (with some exception) tend to be relatively less important. Finally, one-half to two-thirds of the practice variation across MSAs is unexplained by the patient and market factors measured in our data. CONCLUSIONS: A substantial portion of inter-MSA variability in utilization and intensity of post-stroke rehabilitation services cannot be explained by differences in patient characteristics. Given the large practice differences observed across MSAs, it seems unlikely that unmeasured patient differences can account for much more of the practice differences.     

Medicare Part A utilization and expenditures for psychiatric services: 1995

This study provides an overview of Medicare's current coverage and payment policies regarding hospitalization for psychiatric disorders, and presents new information on demographic, diagnostic, utilization, and expenditure characteristics associated with inpatient psychiatric care among 1995 Medicare beneficiaries. Results suggest that utilization and expenditure patterns for Medicare beneficiaries hospitalized for psychiatric illness in 1995 differ across demographic (e.g., age, sex, race) and diagnostic categories. The implications of these findings for current management of the Medicare program as well as the evolution of Medicare managed care systems for behavioral health services are discussed.     

The consumer welfare implications of the hospital ownership mix in the US: an exploratory study

This paper offers an empirical test concerning how hospital ownership mix affects consumer welfare in the US. The test compares the market benefits and costs resulting from an increased presence of nonprofit hospitals by observing empirically how the nonprofit market share impacts hospital care utilization at the margin. The empirical results suggest that too many not-for-profit and public hospitals exist in the inpatient care segment of the typical hospital services industry of the US. In contrast, the empirical findings indicate that too many for-profit hospitals operate in the outpatient care portion of the hospital services industry. The policy implication is that more quality of care per dollar might be obtained by promoting increased for-profit activity to inpatient care and more nonprofit activity to outpatient care in some market areas. This conclusion, however, is tempered with several caveats. We discuss these and also make recommendations for further research.     

The effect of HMOs on fee-for-service health care expenditures: evidence from Medicare revisited

This paper implements a new method for calculating the extent of selection in the aged Medicare HMO market. Selection is measured as the difference in average costs between new Medicare HMO enrollees and Medicare fee-for-service stayers with data from 1990 to 1994. Results suggest Medicare HMO enrollees were 1030 US dollars cheaper in their first year of enrollment. The effect is found entirely in Part A (hospital) expenditures, confirming selection is based on inpatient rather than outpatient or preventive care. These results are consistent with previous work.     

Use and cost of short-stay hospital inpatient services under Medicare, 1988

In this article, data are presented on trends in the use of and program payments for inpatient short-stay hospital services to Medicare beneficiaries. The data on the services used by aged and disabled Medicare beneficiaries are presented for the years 1972 through 1988. The discussion is focused on trends in utilization and program payments resulting from the implementation of the Medicare prospective payment system. The State data for 1988 consist of utilization and program payment statistics by the residence of the beneficiaries in urban and rural areas. This is the first time that inpatient hospital data have been presented in this manner.     

Border-crossing adjustment and personal health care spending by state

This article presents the results of a pioneering effort by the Health Care Financing Administration (HCFA) to measure interstate border crossing for services used by Medicare and non-Medicare beneficiaries. A major focus is to provide estimates of per capita expenditures by State for individual services. Such estimates are not possible without adjustment for interstate border-crossing flows. This is HCFA's first attempt to furnish a unified per capita personal health care expenditures data base comprising all services and covering total population. The study also analyzes interstate differences in expenditure flows by computing rates of inflow and outflow of expenditures, and highlights Medicare/non-Medicare flow differences.     

Influence of hospice use on hospital inpatient mortality: a state-level analysis

This study tests the hypothesis that high hospice enrollment is associated with lower Medicare inpatient mortality. The results show that Medicare inpatient mortality in a state can be explained by hospice enrollment and a host of demographic and market environment variables. An increase in hospice population by 100 individuals is associated with a reduction of 28 inpatient deaths, ceteris paribus. The results suggest, among other things, that opportunities exist for greater expansion of hospice capacity in low-use states to reduce deaths in the expensive hospital setting and improve the quality of end-of-life care for terminally ill patients.     

The effect of HMOs on the inpatient utilization of medicare beneficiaries

OBJECTIVE: To determine the effect of joining HMOs (health maintenance organizations) on the inpatient utilization of Medicare beneficiaries. DATA SOURCES: We linked enrollment data on Medicare beneficiaries to patient discharge data from the California Office of Statewide Health Planning and Development (OSHPD) for 1991-1995. DESIGN AND SAMPLE: A quasi-experimental design comparing inpatient utilization before and after switching from fee-for-service (FFS) to Medicare HMOs; with comparison groups of continuous FFS and HMO beneficiaries to adjust for aging and secular trends. The sample consisted of 124,111 Medicare beneficiaries who switched from FFS to HMOs in 1992 and 1993, and random samples of 108,966 continuous FFS beneficiaries and 18,276 continuous HMO enrollees yielding 1,227,105 person-year observations over five years. MAIN OUTCOMES MEASURE: Total inpatient days per thousand per year. PRINCIPAL FINDINGS: When beneficiaries joined a group/staff HMO, their total days per year were 18 percent lower (95 percent confidence interval, 15-22 percent) than if the beneficiaries had remained in FFS. Total days per year were reduced less for beneficiaries joining an IPA (independent practice association) HMO (11 percent; 95 percent confidence interval, 4-19 percent). Medicare group/staff and IPA-model HMO enrollees had roughly 60 percent of the inpatient days per thousand beneficiaries in 1995 as did FFS beneficiaries (976 and 928 versus 1,679 days per thousand, respectively). In the group/staff model HMOs, our analysis suggests that managed care practices accounted for 214 days of this difference, and the remaining 489 days (70 percent) were due to favorable selection. In IPA HMOs, managed care practices appear to account for only 115 days, with 636 days (85 percent) due to selection. CONCLUSIONS: Through the mid-nineties, Medicare HMOs in California were able to reduce inpatient utilization beyond that attributable to the high level of favorable selection, but the reduction varied by type of HMO.     

Sharp rise in medicare enrollees being held in hospitals for observation raises concerns about causes and consequences

When it is not clear that an ill patient needs to be hospitalized, he or she may be placed "under observation" in a hospital for further evaluation and short-term treatment. These hospital observation services, often a kind of halfway point between emergency department treatment and full inpatient admission, have become a hotly debated policy issue and subject of lawsuits. Using Medicare enrollment and claims data nationwide, we documented a rising trend in the prevalence and duration of hospital observation services in the fee-for-service Medicare population during 2007-09, accompanied by a downward shift in inpatient admissions. As a result, the ratio of observation stays to inpatient admissions increased 34 percent, from an average of 86.9 observation stay events per 1,000 inpatient admissions per month in 2007 to 116.6 in 2009. Medicare beneficiaries were increasingly subjected to hospital observation care and treated as outpatients instead of inpatients, which can expose them to greater out-of-pocket expenses if they are eventually admitted to skilled nursing facilities. Additionally, the nearly one million beneficiaries receiving observation services each year were, on average, being held in observation for a longer period of time per episode-some for longer than seventy-two hours. The prevalence of observation services varied greatly across geographic regions and hospitals. This may be an unintended consequence of Medicare payment policies designed to constrain hospital admissions. Additional research is needed to pinpoint the drivers and consequences of this phenomenon, as is more clarity in clinical practice and Medicare policy guidelines regarding observation care.     

Profiling resource use by primary-care practices: managed Medicare implications

Variations in elderly Medicare beneficiaries' health service use are examined using a 100-percent sample of fee-for-service (FFS) claims data from Alabama, Iowa, and Maryland. Provider specialty, group practice type, practice size, and location are found to be significant factors affecting hospital and ambulatory care utilization and cost, after controlling for patient and regional characteristics. These results provide insights into utilization and cost expectations from different types of primary-care gatekeepers as the Medicare managed care market develops.     

Medicare physician and hospital utilization and expenditure trends.

During the period 1983-86, the period directly following implementation of the Medicare prospective payment system, inpatient hospital care declined. Concurrently, fee-for-service utilization rates for physicians and other noninstitutional suppliers of medical goods and services and for outpatient facility care rose. Medicare expenditures for physicians and other suppliers and for outpatient facility care paralleled changes in utilization. In 1987, the proportion of Medicare patients receiving inpatient hospital care stabilized, but the proportion receiving outpatient hospital care continued to increase.     

Dually eligible individuals with AIDS: characteristics and health services use

This paper explores the prevalence and health care utilization of dually eligible Medicare and Medicaid participants among New Jersey Medicaid recipients with AIDS using linked administrative data. Merged Medicaid claims and AIDS surveillance data were used to analyze participation in the Medicare program by Medicaid recipients in New Jersey diagnosed with AIDS who received services between January 1988 and March 1996. We found that nearly 30% of Medicaid participants had Medicare claims during the observation period, suggesting that Medicare is becoming an important payer of HIV care among individuals eligible for Medicaid. Traditionally disadvantaged groups such as women and racial minorities were less likely to be dually eligible for Medicare, reflecting differences in survival and in eligibility requirements for Social Security Disability Insurance (SSDI). Controlling for other characteristics, dually eligible individuals had shorter lengths of stay and had lower charges per inpatient stay than Medicaid only enrollees. Dual eligibles were also more likely to use antiretroviral (ARV) drugs and were more consistent users of ARV treatment measured by the proportion of time on ARV therapy. Our study suggests that persons with AIDS who may qualify for Medicare because of their disability are different than individuals who only received Medicaid reimbursed services in terms of their health care utilization. Further research is needed to determine the cause of such differences which may include socioeconomic differences between dual eligibles and Medicaid only eligibles, dissimilarities in health status between the two groups, and variation in aspects of insurance coverage particularly in the choice and reimbursement of office-based physicians.