Observation Status, Poverty, and High Financial Liability Among Medicare Beneficiaries

Financial Implications of Short Stay Pediatric Hospitalizations

BACKGROUND

Observation status (OBS) stays incur similar costs to low-acuity, short-stay inpatient (IP) hospitalizations. Despite this, payment for OBS is likely less and may represent a financial liability for children's hospitals. Thus, we described the financial outcomes associated with OBS stays compared to similar IP stays by hospital and payer.

METHODS

We conducted a retrospective cohort study of clinically similar pediatric OBS and IP encounters at 15 hospitals contributing to the revenue management program in 2017. Clinical and demographic characteristics were described. For each hospitalization, the cost coverage ratio (CCR) was calculated by dividing revenue by estimated cost of hospitalization. Differences in CCR were evaluated using Wilcoxon rank sum tests and results were stratified by billing designation and payer. CCR for OBS and IP stays were compared by institution, and the estimated increase in revenue by billing OBS stays as IP was calculated.

RESULTS

OBS was assigned to 70 981 (56.9%) of 124 789 hospitalizations. Use of OBS varied across hospitals (8%-86%). For included hospitalizations, OBS stays were more likely than IP stays to result in financial loss (57.0% vs 35.7%). OBS stays paid by public payer had the lowest median CCR (0.6; interquartile range [IQR], 0.2-0.9). Paying OBS stays at the median IP rates would have increased revenue by $167 million across the 15 hospitals.

CONCLUSIONS

OBS stays were significantly more likely to result in poor financial outcomes than similar IP stays. Costs of hospitalization and billing designations are poorly aligned and represent an opportunity for children's hospitals and payers to restructure payment models.

Community socioeconomic disadvantage drives type of 30-day medical-surgical revisits among patients with serious mental illness

Background

Patients with serious mental illness (SMI) are vulnerable to medical-surgical readmissions and emergency department visits.

Methods

We studied 1,914,619 patients with SMI discharged after medical-surgical admissions in Florida and New York between 2012 and 2015 and their revisits to the hospital within 30 days of discharge.

Results

Patients with SMI from the most disadvantaged communities had greater adjusted 30-day revisit rates than patients from less disadvantaged communities. Among those that experienced a revisit, patients from the most disadvantaged communities had 7.3 % greater 30-day observation stay revisits.

Conclusions

These results suggest that additional investments are needed to ensure that patients with SMI from the most disadvantaged communities are receiving appropriate post-discharge care.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12913-021-06605-y.

Racial and ethnic disparities in hospital observation in Maryland

OBJECTIVES

Hospital observation is a key disposition option from the emergency department (ED) and encompasses up to one third of patients requiring post-ED care. Observation has been associated with higher incidence of catastrophic financial costs and has downstream effects on post-discharge clinical services. Yet little is known about the non-clinical determinants of observation assignment. We sought to evaluate the impact of patient-level demographic factors on observation designation among Maryland patients.

METHODS

We conducted a retrospective analysis of all ED encounters in Maryland between July 2012 and January 2017 for four priority diagnoses (heart failure, chronic obstructive pulmonary disease [COPD], pneumonia, and acute chest pain) using multilevel logistic models allowing for heterogeneity of the effects across hospitals. The primary exposure was self-reported race and ethnicity. The primary outcome was the initial status assignment from the ED: hospital observation versus inpatient admission.

RESULTS

Across 46 Maryland hospitals, 259,788 patient encounters resulted in a disposition of inpatient admission (65%) or observation designation (35%). Black (adjusted odds ratio [aOR]: 1.19; 95% confidence interval [CI]: 1.16-1.23) and Hispanic (aOR: 1.11; 95% CI: 1.01-1.21) patients were significantly more likely to be placed in observation than white, non-Hispanic patients. These differences were consistent across the majority of acute-care hospitals in Maryland (27/46).

CONCLUSION

Black and Hispanic patients in Maryland are more likely to be treated under the observation designation than white, non-Hispanic patients independent of clinical presentation. Race agnostic, time-based status assignments may be key in eliminating these disparities.

Establishing an Orthopedic Excess Hospital Days in Acute Care Program

BACKGROUND

Excess days in acute care (EDAC) after total joint arthroplasty (TJA) represent a large economic burden. We developed an Orthopedic EDAC program that triages TJA patients to the appropriate service line (orthopedic vs medicine) and level of care (observation vs inpatient) on re-presentation. We developed and used evidence-based protocols for the treatment of TJA patients who are rehospitalized.

METHODS

We defined Orthopedic EDAC as the length of stay (LOS) during readmission and observation stays. Our target population included TJA and revision TJA patients. Patients between April 2017 and September 2017 and between October 2017 and September 2018 were defined as pre-implementation and post-implementation of the Orthopedic EDAC program, respectively.

RESULTS

A total of 2,662 patients underwent TJA and revision TJA during the pre-implementation and post-implementation periods. Twenty-three patients were managed on observation status during the study period. Readmissions decreased from 49 (6.1%) during pre-implementation to 37 (2.0%) during post-implementation (P = .004). By design, more rehospitalized patients were on the orthopedic surgery service after implementation of the Orthopedic EDAC program (n = 49; 70%) versus before (n = 22; 35%; P = .028). EDAC LOS decreased from 7.75 days to 4.73 days (P = .005).

CONCLUSION

In this single-center, before-after pilot of a novel Orthopedic EDAC program, we demonstrated a reduction in readmissions and Orthopedic EDAC LOS, as well as improved continuity of care for TJA patients on representation.

Developing and Validating a Measure to Estimate Poverty in Medicare Administrative Data

OBJECTIVE

To develop and validate a measure that estimates individual level poverty in Medicare administrative data that can be used in studies of Medicare claims.

DATA SOURCES

A 2008 to 2013 Medicare Current Beneficiary Survey linked to 2008 to 2013 Medicare fee-for-service beneficiary summary file and census data.

STUDY DESIGN AND METHODS

We used the Medicare Current Beneficiary Survey to define individual level poverty status and linked to Medicare administrative data (N=38,053). We partitioned data into a measure derivation dataset and a validation dataset. In the derivation data, we used a logistic model to regress poverty status on measures of dual eligible status, part D low-income subsidy, and demographic and administrative data, and modeled with and without linked census and nursing home data. Each beneficiary receives a predicted poverty score from the model. Performance was evaluated in derivation and validation data and compared with other measures used in the literature. We present a measure for income-only poverty as well as one for income and asset poverty.

PRINCIPAL FINDINGS

A score (predicted probability of income poverty) >0.5 yielded 58% sensitivity, 94% specificity, and 84% positive predictive value in the derivation data; our score yielded very similar results in the validation data. The model's c-statistic was 0.84. Our poverty score performed better than Medicaid enrollment, high zip code poverty, and zip code median income. The income and asset version performed similarly well.

CONCLUSIONS

A poverty score can be calculated using Medicare administrative data for use as a continuous or binary measure. This measure can improve researchers' ability to identify poverty in Medicare administrative data.

"Implications of cost-sharing for observation care among Medicare beneficiaries: a pilot survey"

Background

Medicare beneficiaries hospitalized under observation status have significant cost-sharing responsibilities under Medicare Part B. Prior work has demonstrated an association between increased cost-sharing and health care rationing among low-income Medicare beneficiaries. The objective of this study was to explore the potential impact of observation cost-sharing on future medical decision making of Medicare beneficiaries.

Methods

Single-center pilot cohort study. A convenience sample of Medicare beneficiaries hospitalized under observation status care was surveyed.

Results

Out of 144 respondents, low-income beneficiaries were more likely to be concerned about the cost of their observation stay than higher-income respondents (70.7% vs29.3%, p = 0.015). If hospitalized under observation status again, there was a trend among low-income beneficiaries to request completion of their workup outside of the hospital (56.3% vs 43.8%), and to consider leaving against medical advice (AMA) (100% vs 0%), though these trends were not statistically significant (p = 0.30).

Conclusion

The results of this pilot study suggest that low-income Medicare beneficiaries hospitalized under observation status have greater concerns about their cost-sharing obligations than their higher income peers. Cost-sharing for observation care may have unintended consequences on utilization for low-income beneficiaries. Future studies should examine this potential relationship on a larger scale.

Electronic supplementary material

The online version of this article (10.1186/s12913-019-3982-8) contains supplementary material, which is available to authorized users.

Identifying Observation Stays In Medicare Data: Policy Implications of a Definition

Observation stays are increasingly common, yet no standard method to identify observation stays in Medicare claims is available, including events with status change. To determine the claims patterns of Medicare observation stays, define comprehensive claims-based methodology for future Medicare observation research and data reporting, and identify policy implications of such definition, we identified potential observation events in a 2014 20% random sample of Medicare beneficiaries with both Part A and B claims and at least 1 acute care stay (1,667,660 events). Observation revenue center (ORC) and Healthcare Common Procedure Coding System codes occurring within 30 days of an inpatient hospitalization were recorded. A total of 125,920 (7.6%) events had an ORC code, and 75,502 (4.5%) were in the outpatient revenue center. Claims patterns varied tremendously, and almost half (47.3%, 59,529) of the ORC codes were associated with an inpatient claim, indicating status change and demonstrating a need for clarity in observation policy. The proposed University of Wisconsin method identified 72,858 of 75,502 (96.5%) events with ORC codes as observation stays, and provides a comprehensive, reproducible methodology.