Post Acute Care Episodes. 3. Results

11/01/2009

Table 1 gives an overview of Medicare payments for index acute admissions and PAC episodes per index acute hospital discharge and per PAC user for each of the 18 alternative episode definitions included in our analysis. Mean index acute hospital payments were $8,287 per index acute hospital discharge versus $10,297 per PAC user. Index acute hospital payments per PAC user were likely higher because of the increased severity of illness associated with beneficiaries discharged to PAC care. Similarly, payments for physician services during the index hospital stay were also slightly higher for PAC users compared with all index acute hospital discharges ($1,531 versus $1,117). Payments for index acute hospital claims and physician payments during the index acute hospital claim did not vary across the PAC episode definitions.

Differences in mean PAC payments across episode definitions demonstrate the effect that each definition has on the number and types of services included in a PAC episode. The mean PAC episode payment differs whether the episode definition is applied to all hospital discharges regardless of PAC use (i.e., per index acute hospital discharge) or to beneficiaries who are discharged from an acute hospital and use Medicare PAC services (i.e., per PAC user). Within Episode Definition A (30 Day Fixed), the mean PAC payment per index acute hospital discharge is $4,592 compared with $9,907 per PAC user. The choice of denominator impacts the mean PAC episode payment across the 18 episode definitions examined in this project.

The inclusion or exclusion of acute hospital readmissions and subsequent PAC services in the episode and corresponding bundled payment is an important policy consideration. In Episode Definition A (30 Day Fixed), mean PAC payments per PAC user were $9,907. In contrast, in Episode Definition B (30 Day Fixed Excluding Readmissions), mean PAC payments per PAC user decreased to $7,591 because the episode definition excluded readmissions and any PAC use subsequent to a readmission.

The decision to allow all services initiated within a specified episode time frame to complete versus calculating a prorated end point of an episode affects the services included in the episode definition and the corresponding bundled payment level. Episode Definition C (30 Day Fixed [prorated]) shows the effect of prorating the payments included in the episode definition, rather than allowing any claim initiating within the fixed period to be part of the episode as in Episode Definition A (30 Day Fixed). Mean PAC payments per PAC user under Episode Definition C (30 Day Fixed [prorated]) were $7,576. In general, less restrictive episode definitions were longer and were associated with higher PAC payments. For example, in the variable length Episode Definition Q (60 Day Variable Length), the mean PAC payment per PAC user was $16,058.

When looking at the mean index acute hospital plus PAC payment and the mean total episode payment, it is clear that payments for the index acute hospital stay make up a high proportion of total payment. For example, in Episode Definition A (30 Day Fixed), 47 percent of mean total episode payments per PAC user are attributable to the index acute hospital stay. The proportion of total episode payments attributable to the index acute hospital stay decreases as the episode length increases. In Episode Definition E (60 Day Fixed), 44 percent of mean total episode payments per PAC user are attributable to the index acute hospital stay.

Table 2 provides more detail on the length of stay associated with the index acute stay and the PAC episode across episode definitions for beneficiaries who used PAC (i.e., N = 109, 236). The mean length of stay in the index acute hospital was 6.8 days. Mean PAC length of stay was defined as the difference between the admission date on the first PAC episode claim and the discharge date on the last PAC episode claim in the episode (or the date of the last day in the fixed window in the case of prorated episodes). PAC episode length of stay varied significantly across episode definitions. PAC length of stay for Episode Definition A (30 Day Fixed) was 37.6 days compared with 24.3 days for Episode Definition C (30 Day Fixed [prorated]). In looking at Episode Definition M (30 Day Variable Length), the episode length of stay was significantly longer at 61.4 days, reflecting the inclusion of PAC services occurring after the 30 day fixed period. In Episode Definition Q (60 Day Variable Length), PAC length of stay was even longer at 74.7 days. The differences between the 30 day and 60 day variable length episodes reflect the additional services occurring after a 30 day gap in services but prior to a 60 day gap in services. Similar patterns were observed for total episode length of stay. Note that total episode length of stay was calculated as the difference between the admission date on the index acute hospital claim and the discharge date on the last PAC episode claim in the episode (or the last date in the fixed period in the case of prorated episodes).

Table 2. Medicare PAC Episode Payments and Utilization per PAC User, by Episode Definition
Episode Definition PAC Users1
(N = 109,236)
Index Acute Hospital2 PAC3 Total Episode4
Mean Payment Mean Length of Stay (days) Mean Payment Mean Length of Stay5 (days) Mean Payment Mean Length of Stay6 (days)
A. 30 Day Fixed: Any Claim Starting within 30 Days after Hospital Discharge $10,297 6.8 $9,907 37.6 $21,735 45.5
B. 30 Day Fixed: Any Claim Starting within 30 Days after Hospital Discharge Excluding Acute Hospital Readmissions $10,297 6.8 $7,591 35.6 $19,419 43.5
C. 30 Day Fixed Following Hospital Discharge (prorated) $10,297 6.8 $7,576 24.3 $19,404 32.3
D. 30 Day Fixed Following Hospital Discharge (prorated) Excluding Acute Hospital Readmissions $10,297 6.8 $5,819 22.2 $17,647 30.1
E. 60 Day Fixed: Any Claim Starting within 60 Days after Hospital Discharge $10,297 6.8 $11,827 45.6 $23,655 53.5
F. 60 Day Fixed: Any Claim Starting within 60 Days after Hospital Discharge Excluding Acute Hospital Readmissions $10,297 6.8 $7,885 39.9 $19,713 47.8
G. 60 Day Fixed Following Hospital Discharge (prorated) $10,297 6.8 $10,703 39.7 $22,531 47.6
H. 60 Day Fixed Following Hospital Discharge (prorated) Excluding Acute Hospital Readmissions $10,297 6.8 $7,216 33.6 $19,043 41.5
I. 90 Day Fixed: Any Claim Starting within 90 Days after Hospital Discharge $10,297 6.8 $13,300 55.6 $25,128 63.5
J. 90 Day Fixed: Any Claim Starting within 90 Days after Hospital Discharge Excluding Acute Hospital Readmissions $10,297 6.8 $8,092 44.6 $19,920 52.5
K. 90 Day Fixed Following Hospital Discharge (prorated) $10,297 6.8 $12,661 51.0 $24,489 58.9
L. 90 Day Fixed Following Hospital Discharge (prorated) Excluding Acute Hospital Readmissions $10,297 6.8 $7,774 39.6 $19,602 47.5
M. 30 Day Variable Episode $10,297 6.8 $14,348 61.4 $26,175 69.3
N. 30 Day Variable Episode Excluding Acute Hospital Readmissions $10,297 6.8 $8,256 47.6 $20,084 55.5
O. 45 Day Variable Episode $10,297 6.8 $15,629 68.2 $27,097 76.1
P. 45 Day Variable Episode Excluding Acute Hospital Readmissions $10,297 6.8 $8,301 49.3 $20,129 57.2
Q. 60 Day Variable Episode $10,297 6.8 $16,058 74.7 $27,886 82.6
R. 60 Day Variable Episode Excluding Acute Hospital Readmissions $10,297 6.8 $8,337 50.8 $20,165 58.7

NOTES:

  1. PAC users are defined as beneficiaries discharged to SNFs, IRFs, or LTCHs within 5 days of discharge from an index acute hospitalization or who are discharged to HHAs or hospital outpatient therapy within 14 days of discharge from an index acute hospitalization. An index acute hospitalization is defined as a hospital admission following a 60 day period without acute, LTCH, SNF, IRF, or HHA service use.
  2. Index acute hospitalizations are defined as hospital admissions following a 60 day period without acute, LTCH, SNF, IRF, or HHA service use.
  3. PAC includes Medicare payments for SNF, IRF, LTCH, HHA, and hospital outpatient therapy. Note that acute hospital readmissions are also included in PAC payments for episode definitions A, C, E, G, I, K, M, O, and Q.
  4. Total episode payment and length of stay include index acute hospital, physician services during index acute hospital, and PAC.
  5. PAC length of stay is defined as the difference between the admission date on the first PAC episode claim and the discharge date on the last PAC episode claim.
  6. For some beneficiaries there may be a gap in service use between the discharge date on the index acute hospital claim and the admission date on the first PAC episode claim.
  7. Total payments columns may not equal the sum of components reported here because of rounding to the nearest dollar.

SOURCE: RTI Analysis of 2006 Medicare claims 5% sample (MM2Y234)

This is a table showing Medicare PAC Episode Payments and Utilization per PAC User, by Episode Definition.

In addition to looking at PAC episodes broadly, our analyses took a more detailed look at the composition of PAC episodes under the different episode definitions. Specifically, Table 3 shows the percentage of beneficiaries with at least one claim for each type of PAC service, the mean length of stay per service type, and the mean payments per service type for beneficiaries discharged to PAC. In Episode Definition A (30 Day Fixed), 53.1 percent of beneficiaries discharged to PAC had at least one HHA claim during their PAC episode and these beneficiaries had an average of 15.9 HHA visits and mean Medicare HHA payments of $2,582. In contrast, in looking at longer episode definitions, we see that a higher proportion of beneficiaries have at least one HHA claim during their episode. For example, in Episode Definition E (60 Day Fixed), 58.0 percent of beneficiaries had at least one HHA claim associated with a mean of 16.8 visits and $2,704 in Medicare payments, and in Episode Definition I (90 Day Fixed), 59.8 percent of beneficiaries had at least one HHA claim associated with a mean of 19.2 visits and $3,047 in Medicare payments.

Table 3. Medicare PAC Episode Payments and Utilization for PAC Users, by Service Type, by Episode Definition

Episode Definition PAC Users1 (N = 109,236)
HHA IRF SNF LTCH Hospital Outpatient Therapy Acute Hospital Readmissions
Percentage with Claim Mean Visits Mean Length of Stay (days) Mean Payment per Service User Percentage with Claim Mean Length of Stay (days) Mean Payment per Service User Percentage with Claim Mean Length of Stay (days) Mean Payment per Service User Percenta ge with Claim Mean Length of Stay (days) Mean Payment per Service User Percentage with Claim Mean Units of Service2 Mean Payment per Service User Percentage with Claim Mean Length of Stay (days) Mean Payment per Service User
A. 30 Day Fixed: Any Claim Starting within 30 Days after Hospital Discharge 53.1 15.9 34.7 $2,582 10.9 13.0 $15,330 44.6 31.6 $9,682 2.3 29.0 $36,098 15.1 19.9 $610 15.5 7.7 $10,482
B. 30 Day Fixed: Any Claim Starting within 30 Days after Hospital Discharge Excluding Acute Hospital Readmissions 52.2 15.8 34.5 $2,568 10.6 12.5 $14,714 43.4 28.8 $8,870 2.1 28.4 $35,523 14.8 19.9 $604
C. 30 Day Fixed Following Hospital Discharge (prorated) 53.1 10.4 20.5 $1,801 10.9 12.5 $14,839 44.6 19.9 $6,499 2.3 21.8 $27,541 15.1 14.2 $462 15.5 6.4 $9,043
D. 30 Day Fixed Following Hospital Discharge (prorated) Excluding Acute Hospital Readmissions 52.2 10.0 19.2 $1,755 10.6 12.2 $14,435 43.4 19.1 $6,238 2.1 22.2 $28,231 14.8 14.2 $457
E. 60 Day Fixed: Any Claim Starting within 60 Days after Hospital Discharge 58.0 16.8 36.0 $2,704 11.2 13.3 $15,652 45.9 34.3 $10,375 2.5 30.1 $37,100 19.2 26.9 $778 23.0 8.4 $11,610
F. 60 Day Fixed: Any Claim Starting within 60 Days after Hospital Discharge Excluding Acute Hospital Readmissions 55.9 16.3 35.2 $2,649 10.7 12.5 $14,771 43.7 29.3 $8,990 2.1 28.5 $35,583 18.3 26.7 $759
G. 60 Day Fixed Following Hospital Discharge (prorated) 58.0 14.9 31.9 $2,455 11.2 13.1 $15,474 45.9 28.5 $8,872 2.5 26.8 $33,524 19.2 23.3 $689 23.0 7.8 $10,901
H. 60 Day Fixed Following Hospital Discharge (prorated) Excluding Acute Hospital Readmissions 55.9 13.8 28.4 $2,315 10.7 12.4 $14,674 43.7 25.6 $8,057 2.1 26.3 $33,276 18.3 23.3 $675
I. 90 Day Fixed: Any Claim Starting within 90 Days after Hospital Discharge 59.8 19.2 42.3 $3,047 11.4 13.5 $15,861 46.6 35.9 $10,791 2.6 30.9 $37,521 21.5 30.9 $883 27.8 9.0 $12,438
J. 90 Day Fixed: Any Claim Starting within 90 Days after Hospital Discharge Excluding Acute Hospital Readmissions 56.9 17.8 39.1 $2,851 10.7 12.6 $14,786 43.8 29.4 $9,029 2.1 28.9 $35,776 19.9 30.2 $851
K. 90 Day Fixed Following Hospital Discharge (prorated) 59.8 17.3 37.5 $2,797 11.4 13.4 $15,737 46.6 33.6 $10,179 2.6 28.7 $35,462 21.5 28.9 $827 27.8 8.6 $11,994
L. 90 Day Fixed Following Hospital Discharge (prorated) Excluding Acute Hospital Readmissions 56.9 15.3 32.0 $2,536 10.7 12.5 $14,716 43.8 28.6 $8,828 2.1 27.2 $34,241 19.9 28.4 $800
M. 30 Day Variable Length Episode 60.2 23.1 51.6 $3,525 11.5 13.7 $16,070 46.9 37.1 $11,126 2.8 32.0 $38,250 22.0 39.8 $1,127 27.3 10.5 $14,136
N. 30 Day Variable Length Episode Excluding Acute Hospital Readmissions 57.0 19.7 44.2 $3,087 10.7 12.6 $14,806 43.8 29.4 $9,033 2.1 29.0 $35,803 19.6 35.4 $973
O. 45 Day Variable Length Episode 60.6 24.6 55.4 $3,734 11.6 13.8 $16,181 47.4 37.6 $11,269 2.8 32.2 $38,398 23.3 41.3 $1,188 29.6 11.0 $14,942
P. 45 Day Variable Length Episode Excluding Acute Hospital Readmissions 57.2 19.9 44.9 $3,123 10.7 12.6 $14,810 43.8 29.5 $9,036 2.1 29.0 $35,801 20.4 36.3 $1,000
Q. 60 Day Variable Length Episode 60.9 25.9 58.3 $3,912 11.7 13.9 $16,290 47.8 38.0 $11,404 2.9 32.5 $38,583 24.2 42.3 $1,224 31.5 11.4 $15,513
R. 60 Day Variable Length Episode Excluding Acute Hospital Readmissions 57.3 20.1 45.4 $3,156 10.7 12.6 $14,814 43.8 29.5 $9,041 2.1 29.0 $35,802 20.9 36.9 $1,021
NOTES:
  1. PAC users are defined as beneficiaries discharged to SNFs, IRFs, or LTCHs within 5 days of discharge from an index acute hospitalization, or who are discharged to HHAs or hospitaloutpatient therapy within 14 days of discharge from an index acute hospitalization. An index acute hospitalization is defined as a hospital admission following a 60 day periodwithout acute, LTCH, SNF, IRF, or HHA service use.
  2. Units of service are as reported on the outpatient department claim.

SOURCE: RTI Analysis of 2006 Medicare claims 5% sample (MM2Y234)
 

The percentage of beneficiaries using services and the level of utilization and payments associated with services increase when we increase fixed periods or increase the variable length gap periods, indicating that PAC service use for some beneficiaries extends over long periods of time and may include multiple settings of care. This is particularly the case for SNF, HHA, and hospital outpatient therapy, which are PAC services that often have long lengths of stay and may occur as a second or third site of PAC for those discharged to another PAC setting immediately after discharge from the acute hospital. The 30 day variable length Episode Definition M shows even higher utilization of HHA; 60.2 percent of beneficiaries had at least one HHA claim associated with a mean of 23.1 visits and $3,525 in Medicare payments. When we compare the mean SNF length of stay under Episode Definition A (30 Day Fixed) with that under Episode Definition C (30 Day Fixed [prorated]), we see that the mean length of stay decreases from 31.6 days to 19.9 days, indicating the effect of the method of handling the last claim in the episode on the services included versus excluded from different definitions.

The results in Table 3 indicate that there are smaller changes in the percentages of beneficiaries using services—as well as the associated length of stay and payments—for IRF and LTCH services under each of the different episode definitions. IRF and LTCH are generally the first sites of PAC for beneficiaries who use these services, compared with SNF, HHA, and hospital outpatient therapy, which may be the first site of care for beneficiaries but may also be later sites of PAC care for beneficiaries using LTCH or IRF immediately after discharge from their index acute hospitalizations. The percentage of beneficiaries with at least one IRF claim varies from 10.6 percent to 11.7 percent across definitions; however, in the case of hospital outpatient therapy, the percentage of beneficiaries with at least one claim varies from 14.8 percent in Episode Definition D (30 Day Fixed Excluding Readmissions [prorated]), the most restrictive episode definition in the analysis, to 24.2 percent under Episode Definition Q (60 Day Variable Length), the least restrictive episode definition in the analysis. Similarly, the percentage of beneficiaries with acute hospital readmissions varies significantly by episode definition. Under Episode Definition A (30 Day Fixed) and Episode Definition C (30 Day Fixed [prorated]), 15.5 percent of beneficiaries have at least one acute hospital readmission compared with 31.5 percent in Episode Definition Q (60 Day Variable Length).3 Note that Episode Definition Q (60 Day Variable Length) is the least restrictive episode definition in the analysis and therefore includes the greatest amount of PAC service use.

Another way of understanding payments per PAC service under alternative definitions of episodes of care is to look at three different payment calculations: (1) Payments per service user, (2) payments per PAC user, and (3) payments per index acute hospital discharge. Table 4 presents these calculations for each of the components of PAC episodes for each of the four 30 day episode definitions, Episode Definition A (30 Day Fixed), Episode Definition B (30 Day Fixed Excluding Readmissions), Episode Definition C (30 Day Fixed [prorated]), and Episode Definition D (30 Day Fixed Excluding Readmissions [prorated]). Looking at the data in this way demonstrates the differences in mean payments depending on the sample for which payments are averaged. Using LTCH as an example, we see that the mean payment per beneficiary using LTCH services under Episode Definition A (30 Day Fixed) is $36,098. When LTCH payments are averaged across all beneficiaries using PAC, which includes beneficiaries using LTCH as well as beneficiaries not using LTCHs during their PAC episodes, the mean payments drop to $831. This large decrease in mean payments across the two samples is because only a very small proportion of beneficiaries discharged to PAC have LTCHs as part of their PAC episode (2.3 percent). The proportion of beneficiaries discharged to LTCHs also varies significantly across the country because of differences in the supply of LTCHs in different parts of the country. When LTCH payments are averaged over all index acute hospital discharges (including both PAC users and beneficiaries not using PAC), the mean payment is $292. Similar patterns are observed across the 30 day fixed episode options. LTCH provides one example of the differences in the availability and use of a service that differs across the three payment calculations. Differences in the payment calculations show similar patterns across service types, but the magnitude of the differences are less than in the example of LTCHs due to the more frequent use of other PAC services. For example, a much higher proportion of beneficiaries use HHA as part of their PAC episode. More than 53 percent of beneficiaries in Episode Definition A (30 Day Fixed) use HHA during their episode, mean payments per service user are $2,582; mean payments per PAC user are $1,371; and mean payments per index acute hospital discharge are $524.

Table 4. Mean Payment per Service User, per PAC User, and per Index Acute Hospital Discharge, by 30 Day Episode Definition
  Episode Definition
  A.
30 Day Fixed:
Any Claim Starting within 30 Days
after Hospital Discharge
B.
30 Day Fixed:
Any Claim Starting within 30 Days
after Hospital Discharge
Excluding Acute Hospital Readmissions
PAC Service % PAC Users with Claim Mean Payment per Service User1 Mean Payment per PAC User2 (N = 109,236) Mean Payment per Index Acute Hospital Discharge3 (N = 310,629) % PAC Users with Claim Mean Payment per Service User1 Mean Payment per PAC User2 (N = 109,236) Mean Payment per Index Acute Hospital Discharge3 (N = 310,629)
Total Episode4 100 $21,735 $21,735 $13,996 100 $19,419 $19,419 $12,121
PAC Only 100 $9,907 $9,907 $4,592 100 $7,591 $7,591 $2,717
Index Hospitalization 100 $10,297 $10,297 $8,287 100 $10,297 $10,297 $8,287
Physician Services during Index Hospitalization5 98.7 $1,551 $1,531 $1,117 98.7 $1,551 $1,531 $1,117
SNF 44.6 $9,682 $4,320 $1,597 43.4 $8,870 $3,851 $1,374
HHA 53.1 $2,582 $1,371 $524 52.2 $2,568 $1,340 $489
IRF 10.9 $15,330 $1,668 $614 10.6 $14,714 $1,562 $552
LTCH 2.3 $36,098 $831 $311 2.1 $35,523 $750 $265
HOPD 6 15.1 $610 $92 $38 14.8 $604 $89 $36
Readmission 15.5 $10,482 $1,625 $1,507 N/A N/A N/A N/A
This is a table showing Mean Payment per Service User, per PAC User, and per Index Acute Hospital Discharge, by 30 Day Episode Definition.

 

Table 4 Mean Payment per Service User, per PAC User, and per Index Acute Hospital Discharge, by 30 Day Episode Definition (continued)
  Episode Definition
  C.
30 Day Fixed Following Hospital Discharge
(prorated)
D.
30 Day Fixed Following Hospital Discharge
(prorated)
Excluding Acute Hospital Readmissions
PAC Service % PAC Users with Claim Mean Payment per Service User1 Mean Payment per PAC User2 (N = 109,236) Mean Payment per Index Acute Hospital Discharge3 (N = 310,629) % PAC Users with Claim Mean Payment per Service User1 Mean Payment per PAC User2 (N = 109,236) Mean Payment per Index Acute Hospital Discharge3 (N = 310,629)
Total Episode4 100 $19,404 $19,404 $12,989 100 $17,647 $17,647 $11,471
PAC Only 100 $7,576 $7,576 $3,585 100 $5,819 $5,819 $2,066
Index Hospitalization Physician Services during Index Hospitalization5 100 $10,297 $10,297 $8,287 100 $10,297 $10,297 $8,287
98.7 $1,551 $1,531 $1,117 98.7 $1,551 $1,531 $1,117
SNF 44.6 $6,499 $2,900 $1,057 43.4 $6,238 $2,708 $961
HHA 53.1 $1,801 $956 $352 52.2 $1,755 $916 $327
IRF 10.9 $14,839 $1,615 $589 10.6 $14,435 $1,532 $541
LTCH 2.3 $27,541 $634 $231 2.1 $28,231 $596 $211
HOPD6 15.1 $462 $70 $28 14.8 $457 $68 $26
Readmission 15.5 $9,043 $1,402 $1,328 N/A N/A N/A N/A
NOTES:
  1. Service users are defined as beneficiaries with at least one claim for the service within the time period of the episode definition.
  2. PAC users are defined as beneficiaries discharged to SNFs, IRFs, or LTCHs within 5 days of discharge from the index acute hospitalization or who are discharged to HHAs or hospital outpatient therapy within 14 days of discharge from the index acute hospitalization
  3. Index acute hospitalizations are defined as hospital admissions following a 60 day period without acute, LTCH, SNF, IRF, or HHA service use. The study sample is limited to live discharges from index acute hospitalizations. Note that per hospital discharge calculations include use of acute and PAC services for beneficiaries who do not meet the criteria of PAC user (use of institutional PAC service within 5 days of acute discharge or HHA or hospital outpatient therapy within 14 days of acute hospital discharge). This includes acute hospital readmissions for non-PAC users.
  4. Total episode payment includes index acute hospital payment, physician payment during the index acute hospital stay, and payment for SNF, IRF, LTCH, HHA, and hospital outpatient therapy. Note that acute hospital readmissions are also included in PAC payments for Episode Definitions A and C.
  5. Physician services are defined as separately billable Part B physician services rendered during the acute hospital stay.
  6. HOPD = hospital outpatient department.
  7. Note that total payments may not equal the sum of components reported here because of rounding to the nearest dollar.

SOURCE: RTI Analysis of 2006 Medicare claims 5% sample (MM2Y175 and MM2Y177)
 

The results presented here also include a series of bar charts that visually demonstrate some of the results shown in earlier tables. Figure 3 compares mean PAC service payments per PAC user across each of the four 30 day fixed episode definitions, Episode Definition A (30 Day Fixed), Episode Definition B (30 Day Fixed Excluding Readmissions), Episode Definition C (30 Day Fixed [prorated]), and Episode Definition D (30 Day Fixed Excluding Readmissions [prorated]). This figure highlights the effect of excluding acute hospital readmissions from the episode definitions as in Episode Definitions B and D. Here we also see that the services most affected by prorating the last claim in the period rather than including anything initiating within the fixed period are SNF and HHA. Mean SNF payments decrease 32.9 percent from $4,320 in Episode Definition A (30 Day Fixed) to $2,900 in Episode Definition C (30 Day Fixed [prorated]), and HHA payments decrease 30.3 percent from $1,371 in Episode Definition A (30 Day Fixed) to $956 in Episode Definition C (30 Day Fixed [prorated]). Service use for other PAC services changes less across the episode definitions. As discussed earlier, the mean payment for IRF changes very little across the 30 day definitions, 3.2 percent decrease between Episode Definition A (30 Day Fixed) and Episode Definition C (30 Day Fixed [prorated]) due to the fact that IRF is generally the first site of care for those who use this service and the fact that the average IRF length of stay is two weeks, less than the shortest fixed period examined here.


Figure 3. PAC Payments per PAC User—30 Day Fixed Episode Definitions, All MS-DRGs

Figure 3. PAC Payments per PAC User—30 Day Fixed Episode Definitions, All MS-DRGs

 
Figure 3 This is a stacked bar chart showing PAC Payments per PAC User—30 Day Fixed Episode Definitions, All MS-DRGs.

The examination of alternative episode definitions also included MS-DRG specific analysis in order to learn more about differential effects of definitions across different medical and surgical cases. In Figures 4 and 5, we show the composition of episodes of care across the four 30 day fixed Episode Definitions A, B, C, and D for MS-DRG 470, major joint replacement or reattachment of lower extremity without a major complication or comorbidity, and MS-DRG 194, simple pneumonia and pleurisy with a complication or comorbidity. These two MS-DRGs are the most frequent MS-DRGs for beneficiaries discharged to PAC; together, they account for 15.7 percent of all PAC users. The results indicate important differences in medical versus surgical MS-DRGs. For example, much of the difference in mean episode payments across definitions for MS-DRG 194 appears to be driven by readmissions. Because a smaller proportion of beneficiaries in MS-DRG 470 have readmissions, we see smaller differences in mean episode payments across the definitions. It is important to note the exclusion of acute hospital readmissions encompasses both the dollars associated with the acute hospital readmission and any subsequent PAC services. Of beneficiaries in MS-DRG 470, 6.2 percent have an acute hospital readmission within 30 days after discharge from their acute hospital stay compared with 16.8 percent of beneficiaries in MS-DRG 194.4 Mean PAC payments under Episode Definition A (30 Day Fixed) were $7,951 for MS-DRG 470 compared with $7,721 for MS-DRG 194, and payments for acute hospital readmissions accounted for 7.6 percent of payments in MS-DRG 470 compared with 19 percent of payments in MS-DRG 194. The effect of prorating the last claim in the episode was less in MS-DRG 470 than in MS-DRG 194. Mean payments under Episode Definition C (30 Day Fixed [prorated]) for MS-DRG 470 were $6,835, a 14 percent decrease from payments under Episode Definition A (30 Day Fixed), and payments under the same definition for MS-DRG 194 were $5,806, a 24.8 percent decrease from payment under Episode Definition A (30 Day Fixed). The differential effect of proration may be due to the types of services used by beneficiaries in MS-DRG 470 compared with those used by beneficiaries in MS-DRG 194, particularly the difference between IRF and SNF services. For example, 19.4 percent of beneficiaries in MS-DRG 470 had an IRF claim as part of their episodes compared with 2.3 percent of beneficiaries in MS-DRG 194. While IRF services are associated with high Medicare payments, they most often occur directly following discharge from the acute hospital and the mean length of stay in IRF settings is less than 2 weeks on average. Therefore IRF services are not as likely to be affected by the proration. In contrast, a high proportion of beneficiaries in MS-DRG 194 use SNF services as part of their episode (49.9 percent), and the average length of stay in SNF is greater than 30 days; therefore, the use of SNF services is more likely to be affected by the proration.


Figure 4. PAC Payments per PAC User—30 Day Fixed Episode Definitions, MS-DRG 470, Major Joint Replacement or Reattachment of Lower Extremity without Major Complication or Comorbidity

Figure 4. PAC Payments per PAC User—30 Day Fixed Episode Definitions, MS-DRG 470, Major Joint Replacement or Reattachment of Lower Extremity without Major Complication or Comorbidity

Figure 4 This is a stacked bar chart showing PAC Payments per PAC User—30 Day Fixed Episode Definitions, MS-DRG 470, Major Joint Replacement or Reattachment of Lower Extremity without Major Complication or Comorbidity.


Figure 5. PAC Payments per PAC User—30 Day Fixed Episode Definitions, MS-DRG 194, Simple Pneumonia and Pleurisy with Complication or Comorbidity

Figure 5. PAC Payments per PAC User—30 Day Fixed Episode Definitions, MS-DRG 194, Simple Pneumonia and Pleurisy with Complication or Comorbidity

Figure 5 This is a stacked bar chart showing PAC Payments per PAC User—30 Day Fixed Episode Definitions, MS-DRG 194, Simple Pneumonia and Pleurisy with Complication or Comorbidity.


Figures 6 and 7 provide a comparison of the fixed episode definitions allowing any claim initiating within the fixed time period (30, 60, or 90 days) to be part of the episode versus the variable length episode definition defined as ending with a 30 day gap in PAC service use. The definitions shown in Figure 6 include all PAC and readmissions, Episode Definition A (30 Day Fixed), Episode Definition E (60 Day Fixed), Episode Definition I (90 Day Fixed), and Episode Definition M (30 Day Variable Length). Figure 7 includes all services prior to a readmission,5 Episode Definition B (30 Day Fixed Excluding Readmissions), Episode Definition F (60 Day Fixed Excluding Readmissions), Episode Definition J (90 Day Fixed Excluding Readmissions), and Episode Definition N (30 Day Variable Length Excluding Readmissions). Mean PAC payments under the fixed episode definitions increased from $9,907 under Episode Definition A (30 Day Fixed) to $11,827 under Episode Definition E (60 Day Fixed) to $13,300 under


Figure 6. PAC Payments per PAC User—30 Day Fixed, 60 Day Fixed, 90 Day Fixed, and 30 Day Variable Length Episode Definitions

Figure 6. PAC Payments per PAC User—30 Day Fixed, 60 Day Fixed, 90 Day Fixed, and 30 Day Variable Length Episode Definitions

Figure 6 This is a stacked bar chart showing PAC Payments per PAC User—30 Day Fixed, 60 Day Fixed, 90 Day Fixed, and 30 Day Variable Length Episode Definitions


Figure 7. PAC Payments per PAC User Excluding Readmissions—30 Day Fixed, 60 Day Fixed, 90 Day Fixed, and 30 Day Variable Length Episode Definitions

Figure 7. PAC Payments per PAC User Excluding Readmissions—30 Day Fixed, 60 Day Fixed, 90 Day Fixed, and 30 Day Variable Length Episode Definitions

Figure 7 This is a stacked bar chart showing PAC Payments per PAC User Excluding Readmissions—30 Day Fixed, 60 Day Fixed, 90 Day Fixed, and 30 Day Variable Length Episode Definitions


Episode Definition I (90 Day Fixed). The components of PAC services that changed the most across these episode definitions were SNF, HHA, and acute hospital readmissions. Mean payments for readmissions increased 64.2 percent between Episode Definition A (30 Day Fixed) and Episode Definition I (90 Day Fixed), and payment for SNF and HHA increased 10.2 percent and 14.4 percent, respectively. In looking at Figure 7, we see much smaller differences in the mean PAC payments per PAC user when episodes end with acute hospital readmissions rather than including readmissions in the episode. These results indicate that readmissions are most likely to occur within a shorter window following acute hospital discharge; therefore, the longer episode definitions that end with an acute hospital readmission do not necessarily capture many additional services. As we saw in Table 3, although there was an increase in the percentage of beneficiaries with an acute hospital readmission—15.5 percent in Episode Definition A (30 Day Fixed) to 23.0 percent in Episode Definition E (60 Day Fixed)—the increase in the proportion of beneficiaries with a readmission in Episode Definition I (90 Day Fixed) was much smaller (27.8 percent). These results show that readmissions make up a significant proportion of episode payments and lead to variation in payments across episode definitions; however, when episode definitions exclude readmissions and subsequent PAC, there is less variation in episode payment across definitions.

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