Examining Post Acute Care Relationships in an Integrated Hospital System. Executive Summary


This report examines Medicare beneficiary episodes of post-acute care (PAC). The importance of understanding beneficiary patterns of cost and use of post-acute services is particularly critical given recent estimates from MedPAC that 2007 spending on PAC was over $45 billion dollars (MedPAC, 2008). Numerous studies have focused on the costs and use of individual services in the Medicare program, including numbers of users, program costs per user, and the factors associated with those costs and use. But few have viewed these patterns across an episode.

Policymakers are calling for greater attention to beneficiary episodes of care in order to understand patterns in service use across PAC providers within the current setting-based payment systems. Examining an episode-based approach allows one to consider the related sets of services that beneficiaries need to treat a condition, or set of conditions. Understanding these related services is critical to facilitating efficiency and improvements in health care quality across the continuum of care. Our work shows that over a third (35.2 percent) of all beneficiaries discharged from acute hospitals go on to use other services. Of those who do, almost 80.0 percent are discharged to either skilled nursing facilities (SNF, 41.1 percent) or sent home with home health services (HHA, 37.4 percent). Another 9.0 percent are discharged to outpatient therapy services (OP). The remaining 10-12.0 percent are leaving the hospital for continued services at a specialized hospital, such as an acute-level inpatient rehabilitation facility (IRF, 10.3 percent) or long term care hospital (LTCH, 2.0 percent).

Understanding these service patterns and the factors that explain them is critical for assessing whether Medicare beneficiaries have access to appropriate services while ensuring that Medicare covers the most cost-effective options with the public Trust Funds. This research examines the relative importance of these different services and how their use varies by individual beneficiary characteristics, such as medical conditions, and the local availability of service options. The work presented here examines episodes of care that can answer questions such as how do individual costs vary by type of health condition and severity of illness? How are institutional, community-based, and physician services tied together for different types of patients?

An episode of care in this work begins when a beneficiary is admitted for an index acute hospital stay in 2006 following a 60-day period without acute hospital or PAC use (HHA, LTCH, IRF, SNF, or OP) and includes all claims until a 60-day gap in acute or PAC service use. The 60-day gap in service use is consistent with Medicare rules on the "spell of illness" definition which applies to SNFs and inpatient hospitals. According to Medicare's definition, a spell of illness includes all readmission and skilled nursing facility service use until a 60-day period without readmission or skilled nursing facility use1. The 60-day period is also consistent with the home health 60-day episode definition.2

The episode definition assumes that services following the index acute admission are related to the original hospitalization and allows us to look at the patterns of care for individual beneficiaries until a 60-day gap in services. This approach differs from many studies of chronic illness trajectories which examine only service use associated with treating a particular condition. By including all claims within these windows of time, we are able to assign claims to episodes when it may not be clear by examining diagnoses codes alone that claims are related. For example, diagnoses codes on inpatient rehabilitation claims are often coded as rehabilitation though they may be related to an episode that initiated in an inpatient acute hospital with a diagnosis of stroke. Our time based approach to constructing episodes allows us to link related claims that may not have similar diagnoses.

Using a person-level approach to defining an episode of care allows us to consider people, their related service use, and the factors that predict cost and utilization. Defining related services lets us consider the effect of comorbidities and severity of illness in explaining total beneficiary costs and use variation, rather than examining services treating a specific condition as though each service were independent of the patient's complicating conditions. This work builds on studies of state and regional variations in Medicare expenditures per service (MedPAC, 2008; Wennberg, Fisher, et al, 2003; Gage, Moon, and Chi, 1999) and looks at the total program costs per patient across an episode of care, similar to past work by this team (Gage, 1999; Gage, Morley, Spain, and Ingber, 2007).

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