Examining Post Acute Care Relationships in an Integrated Hospital System. 3.8 Composition of Total Episode Payments

02/01/2009

One of the main goals of the analyses of post-acute care episodes using the 2006 Medicare claims was to incorporate Medicare carrier claims (including Part B physician services, independent clinical labs, ambulance providers, and freestanding ambulatory surgery centers), DME, and hospice claims in order to learn more about complete composition of service use within an episode. Figures 3-8 through 3-16 graphically display the composition of post-acute care episode payments for all beneficiaries using PAC services, as well as beneficiaries in DRGs 089 Simple Pneumonia & Pleurisy and 544 Major Joint Replacement or Reattachment of Lower Extremity using PAC services. These charts demonstrate the proportion of total episode payments attributable to each type of service in a post-acute episode overall (Figures 3-8, 3-11 and 3-14), and by APR-DRG severity of illness level (Figures 3-9, 3-12, and 3-15), and by MS-DRG severity level (Figures 3-10, 3-13, and 3-16). These figures allow us to compare episode composition for medical versus rehabilitation DRGs, to compare episode composition across severity levels (within APR-DRGs, and within MS-DRGs), and to compare episode composition within DRGs using the APR-DRG severity measures versus the MS-DRG severity measures.

Figure 3-8 demonstrates the composition of Medicare payments for beneficiaries using post-acute care, across all diagnoses (N=109,236). Mean episode payments for all beneficiaries using PAC were $30,028. Medicare payments for index acute hospital admissions (34.3 percent) and SNF (17.9 percent) made up over half of Medicare payments for PAC episodes. Though per beneficiary payments are very high for beneficiaries using LTCH services, across all beneficiaries using PAC (including beneficiaries who use LTCH as well as beneficiaries who do not use LTCH), LTCH payments accounted for 3.7 percent of total Medicare payment for PAC services. In looking at the composition of payments for all PAC users by severity level as measured by APR-DRGs (Figure 3-9) and MS-DRGs (Figure 3-10) similar patterns in the distribution of payments emerge. Mean episode payments increase with increasing severity and the proportion of episode payments for LTCH services also increases with increasing severity. For example, in Figure 3-10, mean episode payments for MS-DRG No CCs were $26,609 and LTCH spending accounted for 3.7 percent of total spending for beneficiaries in this severity level. Mean episode payment for MS-DRG W/MCCs were $39,587 and LTCH payments accounted for 4.8 percent of total spending for beneficiaries in this severity level.


Figure 3-8. Medicare Payments by Service Type, All Post-Acute Users, 2006

Figure 3-8  

Figure 3-8 is titled "Medicare Payments by Service Type, All Post-Acute Users, 2006." This is a pie chart depicting the proportion of Medicare payments attributable to different service types. The mean episode payment for all post-acute users (N=109,236) is $30,028. The pie chart shows that 34.1 percent of Medicare payments are for Index Admissions; 17.9 percent of Medicare payments are for SNF; 6.4 percent of Medicare payments are for IRF; 7.9 percent of Medicare payments are for HHA; 1.0 percent of Medicare payments are for therapy; 3.7 percent of Medicare payments are for LTCH; 15.9 percent of Medicare payments are for acute readmissions; 11.9 percent of Medicare payments are for Part B services; 1.0 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Figure 3-9. Medicare Payments by Service Type, All Post-Acute Users, by APR-DRG

Figure 3-9

Figure 3-9 is titled "Medicare Payments by Service Type, All Post-Acute Users, by APR-DRG." This is a figure with four pie charts depicting the proportion of Medicare payments attributable to different service types for beneficiaries in APR-DRG Severity Index Level 1, APR-DRG Severity Index Level 2, APR-DRG Severity Index Level 3, and APR-DRG Severity Index Level 4. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

The mean episode payment for post-acute users in APR-DRG Severity Index Level 1 (N=16,906) is $21,349. The pie chart for APR-DRG Severity Index Level 1 shows that 37.6 percent of Medicare payments are for Index Admissions; 16.4 percent of Medicare payments are for SNF; 8.0 percent of Medicare payments are for IRF; 10.7 percent of Medicare payments are for HHA; 1.5 percent of Medicare payments are for therapy; 1.1 percent of Medicare payments are for LTCH; 12.3 percent of Medicare payments are for acute readmissions; 11.5 percent of Medicare payments are for Part B services; 0.9 percent of Medicare payments are for DME; and 0 percent of Medicare payments are for Hospice. Note that the percent of payments for hospice are 0 due to rounding.

The mean episode payment for post-acute users in APR-DRG Severity Index Level 2 (N=49,614) is $26,053. The pie chart for APR-DRG Severity Index Level 2 shows that 32.2 percent of Medicare payments are for Index Admissions; 20.0 percent of Medicare payments are for SNF; 7.4 percent of Medicare payments are for IRF; 9.2 percent of Medicare payments are for HHA; 1.1 percent of Medicare payments are for therapy; 1.8 percent of Medicare payments are for LTCH; 15.6 percent of Medicare payments are for acute readmissions; 11.7 percent of Medicare payments are for Part B services; 1.0 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in APR-DRG Severity Index Level 3 (N=31,192) is $34,156. The pie chart for APR-DRG Severity Index Level 3 shows that 32.7 percent of Medicare payments are for Index Admissions; 18.1 percent of Medicare payments are for SNF; 5.7 percent of Medicare payments are for IRF; 7.0 percent of Medicare payments are for HHA; 0.8 percent of Medicare payments are for therapy; 4.1 percent of Medicare payments are for LTCH; 18.1 percent of Medicare payments are for acute readmissions; 12.4 percent of Medicare payments are for Part B services; 1.0 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in APR-DRG Severity Index Level 4 (N=6,845) is $63,087. The pie chart for APR-DRG Severity Index Level 4 shows that 43.2 percent of Medicare payments are for Index Admissions; 11.1 percent of Medicare payments are for SNF; 4.3 percent of Medicare payments are for IRF; 3.7 percent of Medicare payments are for HHA; 0.5 percent of Medicare payments are for therapy; 10.6 percent of Medicare payments are for LTCH; 13.8 percent of Medicare payments are for acute readmissions; 12.0 percent of Medicare payments are for Part B services; 0.8 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

NOTE: Percent of episode payments for hospice appear as 0.0% due to rounding.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Figure 3-10. Medicare Payments by Service Type, All Post Acute Users, by MS-DRG

Figure 3-10

Figure 3-10 is titled "Medicare Payments by Service Type, All Post-Acute Users, by MS-DRG." This is a figure with three pie charts depicting the proportion of Medicare payments attributable to different service types for beneficiaries in MS-DRG Level No CCs, MS-DRG Level W/CCs, and MS-DRG Severity W/MCCs. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

The mean episode payment for post-acute users in MS-DRG Level No CCs (N=61,196) is $26,609. The pie chart for MS-DRG Level No CCs shows that 36.0 percent of Medicare payments are for Index Admissions; 17.7 percent of Medicare payments are for SNF; 6.6 percent of Medicare payments are for IRF; 8.8 percent of Medicare payments are for HHA; 1.1 percent of Medicare payments are for therapy; 3.7 percent of Medicare payments are for LTCH; 14.1 percent of Medicare payments are for acute readmissions; 11.2 percent of Medicare payments are for Part B services; 0.9 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in MS-DRG Level W/CCs (N=26,736) is $30,238. The pie chart for MS-DRG Level W/CCs shows that 30.9 percent of Medicare payments are for Index Admissions; 19.6 percent of Medicare payments are for SNF; 7.1 percent of Medicare payments are for IRF; 8.1 percent of Medicare payments are for HHA; 0.9 percent of Medicare payments are for therapy; 2.7 percent of Medicare payments are for LTCH; 17.4 percent of Medicare payments are for acute readmissions; 12.1 percent of Medicare payments are for Part B services; 1.1 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in MS-DRG Level W/MCCs (N=21,304) is $39,587. The pie chart for MS-DRG Level W/MCCs shows that 34.3 percent of Medicare payments are for Index Admissions; 16.6 percent of Medicare payments are for SNF; 5.4 percent of Medicare payments are for IRF; 5.9 percent of Medicare payments are for HHA; 0.8 percent of Medicare payments are for therapy; 4.8 percent of Medicare payments are for LTCH; 17.8 percent of Medicare payments are for acute readmissions; 13.3 percent of Medicare payments are for Part B services; 1.0 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

NOTE: Note that MS-DRG severity levels were assigned to 2006 DRGs. Results may differ in other years of data.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


For beneficiaries pneumonia using PAC services (Figure 3-11), the services that made up the largest proportion of total episode payments were the index acute admission (25.2 percent) and the SNF claims (26.3 percent). These results are consistent with the high rates of utilization of SNF services for beneficiaries with pneumonia where over half of beneficiaries with pneumonia had a SNF claim in their post-acute episode and the length of stay in the SNF setting averaged 35 days (Table 3-14). For beneficiaries in the lowest severity levels (both APR-DRG 1 and MS-DRG No CCs), index acute hospital and SNF services accounted for more than 50.0 percent of total episode payments (Figure 3-12 and Figure 3-13). The proportion of payments attributable to these services decreased with increasing severity as the use of other post-acute care services including Part B physician services and readmission to acute hospitals increased. Part B services increased as a proportion of total episode payments with increasing severity. For beneficiaries in APR-DRG severity levels 1 and 2, Part B services accounted for 11.0 percent of total episode payments compared with 13.0 percent for beneficiaries in APR-DRG severity levels 3 and 4. Similarly, the proportion of episode payments for Part B services increased from 10.1 percent to 13.9 percent from the lowest to highest MS-DRG severity levels. As expected, the proportion of payments attributable to HHA services decreased with increasing severity levels as these more medically complex beneficiaries are more likely to have treatment in inpatient settings. LTCH service use was very low for beneficiaries in DRG 089 (2.8 percent of payments overall), although for beneficiaries in this DRG with APR-DRG severity level 4, LTCH payments did account for 8.0 percent of Medicare payments. The proportion of payments for IRF services remained small across all levels of patient severity for beneficiaries in DRG 089 (2.4 percent of payments overall).


Figure 3-11. Medicare Payments by Service Type, DRG 089 Simple Pneumonia & Pleurisy Age > 17 w CC

Figure 3-11

Figure 3-11 is titled "Medicare Payments by Service Type, DRG 089 Simple Pneumonia & Pleurisy Age > 17 with CC." This is a pie chart depicting the proportion of Medicare payments attributable to different service types for beneficiaries in DRG 089. The mean episode payment for all post-acute users in DRG 089 (N=4,675) is $20,476. The pie chart shows that 25.2 percent of Medicare payments are for Index Admissions; 26.3 percent of Medicare payments are for SNF; 2.4 percent of Medicare payments are for IRF; 9.1 percent of Medicare payments are for HHA; 1.0 percent of Medicare payments are for therapy; 2.8 percent of Medicare payments are for LTCH; 20.1 percent of Medicare payments are for acute readmissions; 11.9 percent of Medicare payments are for Part B services; 1.2 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Figure 3-12. Medicare Payments by Service Type, DRG 089 Simple Pneumonia & Pleurisy Age > 17 w CC, by APR-DRG

Figure 3-12

Figure 3-12 is titled "Medicare Payments by Service Type, DRG 089 Simple Pneumonia & Pleurisy Age > 17 w CC, by APR-DRG." This is a figure with four pie charts depicting the proportion of Medicare payments attributable to different service types for beneficiaries in DRG 089 in APR-DRG Severity Index Level 1, APR-DRG Severity Index Level 2, APR-DRG Severity Index Level 3, and APR-DRG Severity Index Level 4. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

The mean episode payment for post-acute users in DRG 089 in APR-DRG Severity Index Level 1 (N=153) is $15,383. The pie chart for APR-DRG Severity Index Level 1 shows that 32.4 percent of Medicare payments are for Index Admissions; 25.8 percent of Medicare payments are for SNF; 1.1 percent of Medicare payments are for IRF; 11.1 percent of Medicare payments are for HHA; 0.9 percent of Medicare payments are for therapy; 0.4 percent of Medicare payments are for LTCH; 16.7 percent of Medicare payments are for acute readmissions; 10.7 percent of Medicare payments are for Part B services; 0.6 percent of Medicare payments are for DME; and 0.2 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in DRG 089 in APR-DRG Severity Index Level 2 (N=2,392) is $18,657. The pie chart for APR-DRG Severity Index Level 2 shows that 26.7 percent of Medicare payments are for Index Admissions; 27.1 percent of Medicare payments are for SNF; 2.1 percent of Medicare payments are for IRF; 9.9 percent of Medicare payments are for HHA; 1.0 percent of Medicare payments are for therapy; 1.7 percent of Medicare payments are for LTCH; 19.0 percent of Medicare payments are for acute readmissions; 11.2 percent of Medicare payments are for Part B services; 1.3 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in DRG 089 in APR-DRG Severity Index Level 3 (N=1,950) is $34,156. The pie chart for APR-DRG Severity Index Level 3 shows that 23.4 percent of Medicare payments are for Index Admissions; 25.8 percent of Medicare payments are for SNF; 2.7 percent of Medicare payments are for IRF; 8.6 percent of Medicare payments are for HHA; 0.8 percent of Medicare payments are for therapy; 3.4 percent of Medicare payments are for LTCH; 21.5 percent of Medicare payments are for acute readmissions; 12.5 percent of Medicare payments are for Part B services; 1.1 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in DRG 089 in APR-DRG Severity Index Level 4 (N=180) is $27,365. The pie chart for APR-DRG Severity Index Level 4 shows that 24.7 percent of Medicare payments are for Index Admissions; 23.7 percent of Medicare payments are for SNF; 2.8 percent of Medicare payments are for IRF; 5.3 percent of Medicare payments are for HHA; 0.7 percent of Medicare payments are for therapy; 8.1 percent of Medicare payments are for LTCH; 19.9 percent of Medicare payments are for acute readmissions; 13.6 percent of Medicare payments are for Part B services; 0.9 percent of Medicare payments are for DME; and 0.2 percent of Medicare payments are for Hospice.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Figure 3-13. Medicare Payments by Service Type, DRG 089 Simple Pneumonia & Pleurisy Age > 17 w CC, by MS-DRG

Figure 3-13

Figure 3-13 is titled "Medicare Payments by Service Type, DRG 089 Simple Pneumonia & Pleurisy Age > 17 w CC, by MS-DRG." This is a figure with three pie charts depicting the proportion of Medicare payments attributable to different service types for beneficiaries in DRG 089 in MS-DRG Level No CCs, MS-DRG Level W/CCs, and MS-DRG Severity W/MCCs. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

The mean episode payment for post-acute users in DRG 089 in MS-DRG Level No CCs (N=1,222) is $17,525. The pie chart for MS-DRG Level No CCs shows that 28.2 percent of Medicare payments are for Index Admissions; 28.3 percent of Medicare payments are for SNF; 1.2 percent of Medicare payments are for IRF; 10.0 percent of Medicare payments are for HHA; 1.1 percent of Medicare payments are for therapy; 1.7 percent of Medicare payments are for LTCH; 18.2 percent of Medicare payments are for acute readmissions; 10.1 percent of Medicare payments are for Part B services; 1.1 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in DRG 089 in MS-DRG Level W/CCs (N=2,625) is $20,517. The pie chart for MS-DRG Level W/CCs shows that 25.1 percent of Medicare payments are for Index Admissions; 25.5 percent of Medicare payments are for SNF; 2.7 percent of Medicare payments are for IRF; 9.4 percent of Medicare payments are for HHA; 0.8 percent of Medicare payments are for therapy; 2.6 percent of Medicare payments are for LTCH; 20.7 percent of Medicare payments are for acute readmissions; 11.9 percent of Medicare payments are for Part B services; 1.3 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

The mean episode payment for post-acute users in DRG 089 in MS-DRG Level W/MCCs (N=828) is $24,701. The pie chart for MS-DRG Level W/MCCs shows that 22.4 percent of Medicare payments are for Index Admissions; 26.3 percent of Medicare payments are for SNF; 2.7 percent of Medicare payments are for IRF; 7.3 percent of Medicare payments are for HHA; 1.1 percent of Medicare payments are for therapy; 4.4 percent of Medicare payments are for LTCH; 20.7 percent of Medicare payments are for acute readmissions; 13.9 percent of Medicare payments are for Part B services; 1.1 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

NOTE: Note that MS-DRG severity levels were assigned to 2006 DRGs. Results may differ in other years of data.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Figure 3-14. Medicare Payments by Service Type, DRG 544 Major Joint Replacement or Reattachment of Lower Extremity

Figure 3-14

Figure 3-14 is titled "Medicare Payments by Service Type, DRG 544 Major Joint Replacement or Reattachment of Lower Extremity." This is a pie chart depicting the proportion of Medicare payments attributable to different service types for beneficiaries in DRG 544. The mean episode payment for all post-acute users in DRG 544 (N=15,261) is $23,985. The pie chart shows that 43.9 percent of Medicare payments are for Index Admissions; 13.8 percent of Medicare payments are for SNF; 10.3 percent of Medicare payments are for IRF; 10.4 percent of Medicare payments are for HHA; 1.6 percent of Medicare payments are for therapy; 0.7 percent of Medicare payments are for LTCH; 7.7 percent of Medicare payments are for acute readmissions; 10.9 percent of Medicare payments are for Part B services; 0.6 percent of Medicare payments are for DME; and 0 percent of Medicare payments are for Hospice. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample. Note that the percent of payments for hospice are 0 due to rounding.

NOTE: Percent of episode payments for hospice appear as 0.0% due to rounding.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Figure 3-15. Medicare Payments by Service Type, DRG 544 Major Joint Replacement or Reattachment of Lower Extremity, by APR-DRG

Figure 3-15

Figure 3-15 is titled "Medicare Payments by Service Type, DRG 544 Major Joint Replacement or Reattachment of Lower Extremity, by APR-DRG." This is a figure with four pie charts depicting the proportion of Medicare payments attributable to different service types for beneficiaries in DRG 544 in APR-DRG Severity Index Level 1, APR-DRG Severity Index Level 2, APR-DRG Severity Index Level 3, and APR-DRG Severity Index Level 4. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

The mean episode payment for post-acute users in DRG 544 in APR-DRG Severity Index Level 1 (N=4,686) is $20,513. The pie chart for APR-DRG Severity Index Level 1 shows that 50.6 percent of Medicare payments are for Index Admissions; 10.1 percent of Medicare payments are for SNF; 8.7 percent of Medicare payments are for IRF; 11.4 percent of Medicare payments are for HHA; 2.2 percent of Medicare payments are for therapy; 0.3 percent of Medicare payments are for LTCH; 5.3 percent of Medicare payments are for acute readmissions; 10.7 percent of Medicare payments are for Part B services; 0.7 percent of Medicare payments are for DME; and 0 percent of Medicare payments are for Hospice. Note that the percent of payments for hospice are 0 due to rounding.

The mean episode payment for post-acute users in DRG 544 in APR-DRG Severity Index Level 2 (N=7,272) is $24,446. The pie chart for APR-DRG Severity Index Level 2 shows that 42.8 percent of Medicare payments are for Index Admissions; 14.5 percent of Medicare payments are for SNF; 10.8 percent of Medicare payments are for IRF; 10.3 percent of Medicare payments are for HHA; 1.5 percent of Medicare payments are for therapy; 0.6 percent of Medicare payments are for LTCH; 8.2 percent of Medicare payments are for acute readmissions; 10.8 percent of Medicare payments are for Part B services; 0.6 percent of Medicare payments are for DME; and 0 percent of Medicare payments are for Hospice. Note that the percent of payments for hospice are 0 due to rounding.

The mean episode payment for post-acute users in DRG 544 in APR-DRG Severity Index Level 3 (N=3,161) is $27,223. The pie chart for APR-DRG Severity Index Level 3 shows that 39.6 percent of Medicare payments are for Index Admissions; 16.2 percent of Medicare payments are for SNF; 11.2 percent of Medicare payments are for IRF; 9.7 percent of Medicare payments are for HHA; 1.0 percent of Medicare payments are for therapy; 1.4 percent of Medicare payments are for LTCH; 9.3 percent of Medicare payments are for acute readmissions; 11.1 percent of Medicare payments are for Part B services; 0.6 percent of Medicare payments are for DME; and 0 percent of Medicare payments are for Hospice. Note that the percent of payments for hospice are 0 due to rounding.

The mean episode payment for post-acute users in DRG 544 in APR-DRG Severity Index Level 4 (N=118) is $43,823. The pie chart for APR-DRG Severity Index Level 4 shows that 32.1 percent of Medicare payments are for Index Admissions; 21.3 percent of Medicare payments are for SNF; 12.7 percent of Medicare payments are for IRF; 6.0 percent of Medicare payments are for HHA; 0.4 percent of Medicare payments are for therapy; 3.6 percent of Medicare payments are for LTCH; 10.7 percent of Medicare payments are for acute readmissions; 12.6 percent of Medicare payments are for Part B services; 0.5 percent of Medicare payments are for DME; and 0.1 percent of Medicare payments are for Hospice.

NOTE: Percent of episode payments for hospice appear as 0.0% due to rounding.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Figure 3-16. Composition of PAC Episode Payments, DRG 544 Major Joint Replacement or Reattachment of Lower Extremity, by MS-DRG

Figure 3-16

Figure 3-16 is titled "Composition of PAC Episode Payments, DRG 544 Major Joint Replacement or Reattachment of Lower Extremity, by MS-DRG." This is a figure with two pie charts depicting the proportion of Medicare payments attributable to different service types for beneficiaries in DRG 544 in MS-DRG Level No MCCs and MS-DRG Severity W/MCCs. The data source for this analysis is RTI analysis of 2006 Medicare claims 5% sample.

The mean episode payment for post-acute users in DRG 544 in MS-DRG Level No MCCs (N=14,446) is $23,441. The pie chart for MS-DRG Level No MCCs shows that 44.8 percent of Medicare payments are for Index Admissions; 13.4 percent of Medicare payments are for SNF; 10.2 percent of Medicare payments are for IRF; 10.6 percent of Medicare payments are for HHA; 1.6 percent of Medicare payments are for therapy; 0.6 percent of Medicare payments are for LTCH; 7.3 percent of Medicare payments are for acute readmissions; 10.7 percent of Medicare payments are for Part B services; 0.6 percent of Medicare payments are for DME; and 0 percent of Medicare payments are for Hospice. Note that the percent of payments for hospice are 0 due to rounding.

The mean episode payment for post-acute users in DRG 544 in MS-DRG Level W/MCCs (N=815) is $35,409. The pie chart for MS-DRG Level W/CCs shows that 33.2 percent of Medicare payments are for Index Admissions; 18.6 percent of Medicare payments are for SNF; 12.0 percent of Medicare payments are for IRF; 7.5 percent of Medicare payments are for HHA; 1.1 percent of Medicare payments are for therapy; 2.8 percent of Medicare payments are for LTCH; 11.9 percent of Medicare payments are for acute readmissions; 12.2 percent of Medicare payments are for Part B services; 0.6 percent of Medicare payments are for DME; and 0 percent of Medicare payments are for Hospice. Note that the percent of payments for hospice are 0 due to rounding.

NOTES:
Note that MS-DRG severity levels were assigned to 2006 DRGs. Results may differ in other years of data.
Percent of episode payments for hospice appear as 0.0% due to rounding.

SOURCE: RTI analysis of 2006 Medicare Claims 5% sample.


Several key differences between beneficiaries in DRG 089 Simple Pneumonia & Pleurisy and DRG 544 Major Joint Replacement or Reattachment of Lower Extremity emerged in the analysis of episode composition. The proportion of total episode payments attributable to the index admission was significantly higher for beneficiaries in DRG 544 (43.9 percent overall) compared to DRG 089 (25.2 percent overall). One explanation for this is simply the nature of the care for beneficiaries in this DRG. Beneficiaries admitted to acute hospitals for DRG 544 are likely to undergo surgical procedures and therefore incur higher costs during the initial hospital stay. The proportion of episode payments for IRF services was also significantly higher for beneficiaries in DRG 544 (10.3 percent of payments overall) compared to beneficiaries in DRG 089 (2.4 percent of payments overall). As presented in section 3.5, approximately 20.0 percent of beneficiaries in DRG 544 had a claim for IRF services compared to less than 3.0 percent of beneficiaries in DRG 089. The proportion of episode payments for readmissions during post-acute episodes was lower for beneficiaries in DRG 544 (7.7 percent of payments overall) compared with beneficiaries in DRG 089 (20.1 percent of payments overall). Over 31.0 percent of beneficiaries in DRG 089 had an acute readmission in their PAC episode compared to 14.0 percent of beneficiaries in DRG 544 (Section 3.5). The differences in service use between the medical and rehabilitation DRGs are reflected in the proportion of total payments attributable to each service type. Overall, DME, hospice, and Therapy (including hospital outpatient therapy and therapy) account for very small proportions of total episode payments in both DRGs due to the lower payments associated with these services during episodes of PAC in comparison to the payments associated with inpatient service use.

Examining episode payments across all beneficiaries in a DRG and severity level, rather than payments by user of the service, is a helpful step in understanding the overall distribution of payments among beneficiaries with similar diagnoses and complexity. While the payments per service type, per user of services, presented in Section 3.5 are also important to understand, the graphic representation of the proportions of total spending by service type in a DRG bring us a step closer to understanding the overall allocation of Medicare spending across services. These analyses may be helpful as we look to consider bundled payment options. The composition of episodes, the definition of episodes, and potential bundling options will be explored further in future work in 2008 and 2009.

View full report

Preview
Download

"report.pdf" (pdf, 1.14Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®