Medicare Post-Acute Care: Quality Measurement Final Report. B. Impact of Payment Changes


Each of these payment changes -- i.e., the shift to PPS, the option of being paid a blend of PPS and historic cost-based payment rates or the full Federal PPS amount, increases in payment rates for case mix categories, potential reductions in base payment amounts -- may have an impact on the quality of and access to post-acute care. For example, implementation of the acute care hospital PPS in 1983 had a major impact on hospital and post-acute care. One important impact was that the hospital PPS led to decreased lengths of hospital stay. Between 1980 and 1987, the mean length of a hospital stay decreased approximately 13%, from 9.7 days to 8.4 days.3;4 The discharge of sicker patients earlier in the course of illness5 was associated with increased utilization of post-acute care,4;6 contributing to growth in the use of and expenditures for post-acute care. However, despite shifts in where services were delivered following implementation of the hospital PPS, there was no convincing evidence that the quality of care, as measured by patient outcomes, was significantly affected by the implementation of the hospital PPS, with the exception of premature discharge of patients.7 A potential explanation for stability in outcomes is that hospital services were adequately replaced by post-acute care services.

Nonetheless, it is reasonable to anticipate shifts in who receives post-acute care, the settings in which such services are delivered, and the quality of care following implementation of the recent and significant payment changes for SNFs, HHAs, and rehabilitation hospitals. Anticipating the potential effects of multiple post-acute care payment changes is complex, given different payment systems for each post-acute setting, each implemented and modified at different points in time. Key payment design elements that may uniquely affect quality and access to care include differences in the unit of payment (i.e., per episode versus per diem payments), the basis for calculating payments (e.g., resource use versus patient characteristics), and the different payment rates across settings (particularly for patients with potentially similar conditions). In addition, it is less clear what downstream types of care might be necessary or sufficient to fill in voids or decrements in quality that could occur because of the design of the various post-acute care PPSs. Because the PPSs for SNFs, HHA, and rehabilitation hospitals were first and foremost aimed at reducing post-acute care expenditures by limiting reimbursement to providers, there is widespread concern about adverse effects on access and quality of post-acute care if the payment systems create incentives for providers to change admission, treatment, and discharge practices. For example, in recent reports the Office of the Inspector General indicated that high cost patients may have had difficulties accessing SNF and HHA services as a result of payment changes.8;9 Thus, it is increasingly important to understand and monitor, particularly in view of the recent significant post-acute care payment changes, the extent of overlap in case mix and the quality of care provided in various post-acute care settings.