Post-Acute Care Episodes Expanded Analytic File. 2.5 Standardizing Payments for Geographic Benchmarking Analysis


One of the goals of this work was to perform geographic benchmarking analysis to look at the differences in PAC payments across different levels of geography and learn more about differences in patterns of PAC utilization as they relate to differences in the local availability of providers and practice patterns across the country. Analyses were conducted at the state and the core-based statistical area (CBSA) levels. Mean PAC episode length and mean PAC payments were calculated per discharge for acute hospital-initiated episodes and per PAC user for both acute hospital-initiated and community entrant episodes.

In conducting the geographic benchmarking analysis, we standardized payments to remove the effects of payment adjustments caused by geography or other policy considerations. By standardizing the payments, we remove payments related to wage adjustments, indirect medical education (IME), and disproportionate share hospital (DSH) payments. Our approach to standardizing payments included using base rate payments and case-mix weights as published in the Federal Register and applying those to our claims using the case-mix weight variables in the standard analytic files. We applied rates and weights according to the payment policies in place for each payment system corresponding to the type of PAC service and the claim date.

The methods used to standardize payments were as follows:

  • Acute hospital standardized payment = base rate * MS-DRG weight
  • IRF standardized payment = base rate * case-mix group (CMG) weight
  • LTCH standardized payment = base rate * LTCH DRG weight
  • HHA standardized payment = base rate * home health resource group (HHRG) weight
  • SNF standardized payment = per diem * resource utilization group (RUG) weight * days
  • Therapy standardized payment = physician fee schedule amount1 * units

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