We used the HCUP data to establish the proportion of total inpatient days, total discharges, total charges, and case-mix index (the average DRG relative weight) attributable to each payer. We estimated the Medicare SSI statistics by applying the hospital's SSI ratio to the Medicare data. Doing so assumes that the Medicare SSI patients have the same length of stay, case mix and charges as other Medicare patients. We determined each hospital's proportion of patients that were classified as "other government" in 1997 and applied the relevant ratio to the FY1998 "other" category to obtain an estimate of proportion of the hospital's patients covered by local indigent care programs. We used the data on patients covered by Medicare SSI, Medicaid, self-pay, no-charge and local indigent care programs to establish the claims-based measures of care provided to low-income patients that we discussed in Chapter 6.
We used correlation analysis to examine the relationship between key low-income patient measures that could be used in an allocation formula (e.g. proportion of days, discharges, and revenues and case-mix index including/excluding Medicare SSI patients). The degree of correlation between the measures can be used to indicate whether the choice of the measure (utilization or revenue) used to describe hospital's low-income patients is likely to have a significant effect on the distribution of funds. The HCUP data is for inpatient services only and allowed us to test only inpatient utilization and gross inpatient revenue measures. HCUP does not have the outpatient data and uncompensated care data that would allow us to evaluate measures using financial risk.
We also simulated potential DSH allocation policies and compared the results to the current distribution of DSH. We used the correlation between the DSH payment and the hospital's net income as a comparative measure of how well the payments target financially vulnerable safety net hospitals.