Examining Post Acute Care Relationships in an Integrated Hospital System. Section 1 Background

02/01/2009

Few medical services are used in isolation, with the exception of physician services. Typically, patients requiring treatment in a hospital also need related follow-up services, with at least their physician, and often with home health, skilled nursing facility, or outpatient services. These services may be considered related as they are part of the beneficiary's treatment for the original illness requiring hospital admission. Yet, little work examines the relative use of these services across an episode of care.

The one exception is with the chronically ill populations, where policymakers and insurers recognize these populations use multiple services and have tried to focus case management and other practices on coordinating care for these populations. These efforts typically focus on physician services and their role in managing costs, use, and outcomes for these high use populations. Some have also begun including hospital use in these studies as research has shown that the higher cost chronically ill populations often have inpatient admissions associated with physician services. Yet, few studies effectively consider the post-hospital services; an oversight as they account for a substantial share of both the chronically ill and other beneficiary's total episode of care costs. They also may be key to controlling adverse outcomes and reducing avoidable hospitalizations.

This study focuses on all Medicare beneficiaries (chronic and acute care populations) with a hospital admission in 2006 following 60 days without acute or PAC use. Beneficiaries are assigned to a condition-group based on the DRG recorded on the acute hospital claim. In examining episodes of care, we consider the range of services that may be related to treating this condition. Beneficiaries are assigned to a group based on the DRG on the index acute hospital claim. This allows us to characterize a beneficiary's use of services based on the initial reason for admission though diagnoses on subsequent claims may differ from the diagnoses on the index claim.

Second, this study examines the effects of organizational relationships on the likelihood of using different types of services. While medical conditions are hypothesized to be the most significant predictor of service use, the availability of substitute services is also an important factor (Gage, 1999; Gage et al, 2007; Gage, Morley, and Green, 2006; Bewkes-Buntin, 2005). Understanding not only the availability, but the effect of financial or other types of relationships is important for considering future policy options, including mechanisms for bundling payments across an episode of care.

This report analyzes variations in costs and utilization patterns for Medicare beneficiaries in different parts of the country. The analyses control for case-mix differences, both the primary conditions and the types and severity of comorbid conditions. The analyses also control for differences in resources in each state as we consider the factors that predict the type of post-hospital care, level of care, costs of care, and outcomes.

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