The Effect of Medicare's Prospective Payment System on Discharge Outcomes of Skilled Nursing Facility Residents

Is More Always Better? Financially Motivated Therapy and Patient Outcomes in Skilled Nursing Facilities

OBJECTIVE

To determine if financially motivated therapy in Skilled Nursing Facilities (SNFs) is associated with patient outcomes.

DESIGN

Cohort study using 2018 Medicare administrative data.

SETTING AND PARTICIPANTS

13,949 SNFs in the United States.

PARTICIPANTS

934,677 Medicare Part A patients admitted to SNF for post-acute rehabilitation (N=934,677).

INTERVENTIONS

The primary independent variable was an indicator of financially motivated therapy, separate from intensive therapy, known as thresholding, defined as when SNFs provide 10 or fewer minutes of therapy above weekly reimbursement thresholds.

MAIN OUTCOME MEASURES

Dichotomous indicators of successful discharge to the community vs institution and functional improvement on measures of transfers, ambulation, or locomotion. Mixed effects models estimated relations between thresholding and community discharge and functional improvement, adjusted for therapy intensity, patient, and facility characteristics. Sensitivity analyses estimated associations between thresholding and outcomes when patients were stratified by therapy volume.

RESULTS

Thresholding was associated with a small positive effect on functional improvement (odds ratio 1.07; 95% CI 1.06-1.09) and community discharge (odds ratio 1.03, 95% CI 1.02-1.05). Effect sizes for functional improvement were consistent across patients receiving different volumes of therapy. However, effect sizes for community discharge were largest for patients in low-volume therapy groups (odds ratio 1.27, 95% CI 1.18-1.35).

CONCLUSIONS

Patients who experienced thresholding during post-acute SNF stays were slightly more likely to improve in function and successfully discharge to the community, especially for patients receiving lower volumes of therapy. While thresholding is an inefficient and financially motivated practice, results suggest that even small amounts of extra therapy time may have contributed positively to outcomes for patients receiving lower-volume therapy. As therapy volumes decline in SNFs, these results emphasize the importance of Medicare payment policy designed to promote, not disincentivize, potentially beneficial rehabilitation services for patients.

Does prospective payment influence quality of care? A systematic review of the literature

In the light of rising health expenditures, the cost-efficient provision of high-quality inpatient care is on the agenda of policy-makers worldwide. In the last decades, prospective payment systems (PPS) for inpatient care were used as an instrument to contain costs and increase transparency of provided services. It is well documented in the literature that prospective payment has an impact on structure and processes of inpatient care. However, less is known about its effect on key outcome indicators of quality of care. In this systematic review, we synthesize evidence from studies investigating how financial incentives induced by PPS affect indicators of outcome quality domains of care, i.e. health status and user evaluation outcomes. We conduct a review of evidence published in English, German, French, Portuguese and Spanish language produced since 1983 and synthesize results of the studies narratively by comparing direction of effects and statistical significance of different PPS interventions. We included 64 studies, where 10 are of high, 18 of moderate and 36 of low quality. The most commonly observed PPS intervention is the introduction of per-case payment with prospectively set reimbursement rates. Abstracting evidence on mortality, readmission, complications, discharge disposition and discharge destination, we find the evidence to be inconclusive. Thus, claims that PPS either cause great harm or significantly improve the quality of care are not supported by our findings. Further, the results suggest that reductions of length of stay and shifting treatment to post-acute care facilities may occur in the course of PPS implementations. Accordingly, decision-makers should avoid low capacity in this area.

Medicare payment policy in skilled nursing facilities: Lessons from a history of mixed success

The current policy environment for rehabilitation in skilled nursing facilities (SNFs) is complex and dynamic, and SNFs are facing the dual challenges of recent Medicare payment policy change that disproportionately impacts rehabilitation for older adults and the COVID-19 pandemic. This article introduces an adapted framework based on Donabedian's model for evaluating quality of care and applies it to decades of Medicare payment policy to provide a historical view of how payment policy changes have impacted rehabilitation processes and patient outcomes for Medicare beneficiaries in SNFs. This review demonstrates how SNF responses to Medicare payment policy have historically varied based on organizational factors, highlighting the importance of considering such organizational factors in monitoring policy response and patient outcomes. This historical perspective underscores the mixed success of previous Medicare policies impacting rehabilitation and patient outcomes for older adults receiving care in SNFs and can help in predicting SNF industry response to current and future Medicare policy changes.

Therapy Staffing in Skilled Nursing Facilities Declined after Implementation of the Patient-Driven Payment Model

OBJECTIVE

The Patient-Driven Payment Model (PDPM), a new reimbursement policy for Skilled Nursing Facilities (SNFs), was implemented in October 2019. PDPM disincentivizes provision of intensive physical and occupational therapy, however, there is concern that declines in therapy staffing may negatively impact patient outcomes. This study aimed to characterize the SNF industry response to PDPM in terms of therapy staffing.

DESIGN

Segmented regression interrupted time series.

SETTING AND PARTICIPANTS

15,432 SNFs in the United States.

METHODS

Using SNF Payroll Based Journal data from January 1, 2019, through March 31, 2020, we calculated national weekly averages of therapy staffing minutes per patient-day for all therapy staff and for subgroups of physical and occupational therapists, therapy assistants, contract staff, and in-house employees. We used interrupted time series regression to estimate immediate and gradual effects of PDPM implementation.

RESULTS

Total therapy staffing minutes per patient-day declined by 5.5% in the week immediately following PDPM implementation (P < .001), and the trend experienced an additional decline of 0.2% per week for the first 6 months after PDPM compared with the negative pre-PDPM baseline trend (P < .001), for a 14.7% total decline by the end of March 2020. Physical and occupational therapy disciplines experienced similar immediate and gradual declines in staffing. Assistant and contract staffing reductions were larger than for therapist and in-house employees, respectively. All subgroups except for assistants and contract staff experienced significantly steeper declines in staffing trends compared with pre-PDPM trends.

CONCLUSIONS AND IMPLICATIONS

SNFs appeared to have responded to PDPM with both immediate and gradual reductions in therapy staffing, with an average decline of 80 therapy staffing minutes over the average patient stay. Assistant and contract staff experienced the largest immediate declines. Therapy staffing and quality outcomes require ongoing monitoring to ensure staffing reductions do not have negative implications for patients.

Palliative space-time: Expanding and contracting geographies of US health care

Two important changes are happening in health care in the US. As hospitals close in high numbers, the geographies of health care services are changing. Also, the ageing of the population brings about new and complex care needs. These are not discrete trends, as ageing impacts the who, what, and where of care needs, and hospital closures remakes the geographies of where people overall access care. Developed out of research on the impacts of hospital restructuring on workers, patients, and communities, this paper aims to understand how health care financing, care needs for the ageing, and new geographies of health services are intertwined. To do so, I look back to 1980s policy changes to Medicare, the federal health insurance program for the elderly and disabled. In 1982, Congress made two important changes to Medicare. The program began covering hospice services, constituting an expansion of care, and the government drastically changed the way it reimburses providers, effectively a contraction of the program. I trace the impacts of these changes over the next decades through analysis of media coverage and secondary research on hospital budgets. Drawing on the concept of palliative space-time, I identify a contradictory logic of death at the center of this expansion and contraction of the health care system. This death logic works to destabilize an already uneven geography of health service. Yet, this crisis has the potential for more just geographies of health and care.

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US population ageing poses new challenges for caring for people as they age.

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Hospital closures across the US alter how and where people receive care.

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Palliative Space-time shows systems that struggle to exist but have radical potential.

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Palliative Space-time helps analyse health systems, death, and care.

Association Between Therapy Intensity and Discharge Outcomes in Aged Medicare Skilled Nursing Facilities Admissions

OBJECTIVES

To determine the association between therapy intensity and discharge outcomes for aged Medicare skilled nursing facilities (SNFs) fee-for-service beneficiaries and to determine the association between therapy intensity and time to community discharge.

DESIGN

Retrospective observational design.

SETTING

SNFs.

PARTICIPANTS

Aged Medicare fee-for-service beneficiaries (N=311,338) in 3605 SNFs.

INTERVENTIONS

The total minutes of physical therapy, occupational therapy, and speech therapy per day were divided into intensity groups: high (≥60min); medium-high (45-<60min); medium-low (30-<45min); and low (<30min).

MAIN OUTCOME MEASURES

Four discharge outcomes-community, hospitalization, permanent placement, and death-were examined using a multivariate competing hazards model. For those associated with community discharge, a Poisson multivariate model was used to determine whether length of stay differed by intensity.

RESULTS

High intensity therapy was associated with more community discharges in comparison to the remaining intensity groups (hazard ratio, .84, .68, and .433 for medium-high, medium-low, and low intensity groups, respectively). More hospitalizations and deaths were found as therapy intensity decreased. Only high intensity therapy was associated with a 2-day shorter length of stay (incident rate ratio, .95).

CONCLUSIONS

High intensity therapy was associated with desirable discharge outcomes and may shorten SNF length of stay. Despite growing reimbursements to SNFs for rehabilitation services, there may be desirable benefits to beneficiaries who receive high intensity therapy.

Community Discharge of Nursing Home Residents: The Role of Facility Characteristics

OBJECTIVE

Using a socio-ecological model, this study examines the influence of facility characteristics on the transition of nursing home residents to the community after a short stay (within 90 days of admission) or long stay (365 days of admission) across states with different long-term services and supports systems.

DATA SOURCE

Data were drawn from the Minimum Data Set, the federal Online Survey, Certification, and Reporting (OSCAR) database, the Area Health Resource File, and the LTCFocUs.org database for all free-standing, certified nursing homes in California (n = 1,127) and Florida (n = 657) from July 2007 to June 2008.

STUDY DESIGN

Hierarchical generalized linear models were used to examine the impact of facility characteristics on the probability of transitioning to the community.

PRINCIPAL FINDINGS

Facility characteristics, including size, occupancy, ownership, average length of stay, proportion of Medicare and Medicaid residents, and the proportion of residents admitted from acute care facilities are associated with discharge but differed by state and whether the discharge occurred after a short or long stay.

CONCLUSION

Short- and long-stay nursing home discharge to the community is affected by resident, facility, and sometimes market characteristics, with Medicaid consistently influencing discharge in both states.

Medicare skilled nursing facility reimbursement and upcoding

Post-acute care provided by skilled nursing facilities (SNFs) is reimbursed by Medicare under a prospective payment system using resource utilization groups (RUGs) that adjust payment intensity on the basis of predefined ranges of weekly therapy minutes provided and the functionality of the patient. Individual RUGs account for differences in the intensity of care provided, but there exists significant regional variation in the payments SNFs receive from Medicare due to the use of geographic adjustment factors. This paper is the first to use this geographic variation in the generosity of Medicare reimbursement to empirically test if SNFs respond to payment differences between RUG categories. The results are highly suggestive that SNFs upcode patients by providing additional therapy minutes to increase revenue, whereas we find no evidence of upcoding related to patient functionality scores. Simulating how different payment differentials affect RUG selection, we predict that reducing the financial incentive to upcode could result in significant savings to Medicare.

Who transitions to the community from nursing homes? Comparing patterns and predictors for short-stay and long-stay residents

Little is known about characteristics of those who transition to the community after long stays in nursing facilities. Yet this information is highly relevant to efforts to reduce preventable nursing facility use. This study identifies and compares community transition among short-stay (1-90 days) and long-stay residents (91-365 days) aged 65 + using Kaplan-Meier survival estimates and logistic regression to analyze 3,762 episodes of care in Southern California. Over 90% of community discharges occurred in the first 90 days, and few characteristics predicted discharge after 90 days. The findings inform transition programs' efforts to identify and effectively target residents after 90-day stays.

Vertical integration and optimal reimbursement policy

Health care providers may vertically integrate not only to facilitate coordination of care, but also for strategic reasons that may not be in patients' best interests. Optimal Medicare reimbursement policy depends upon the extent to which each of these explanations is correct. To investigate, we compare the consequences of the 1997 adoption of prospective payment for skilled nursing facilities (SNF PPS) in geographic areas with high versus low levels of hospital/SNF integration. We find that SNF PPS decreased spending more in high integration areas, with no measurable consequences for patient health outcomes. Our findings suggest that integrated providers should face higher-powered reimbursement incentives, i.e., less cost-sharing. More generally, we conclude that purchasers of health services (and other services subject to agency problems) should consider the organizational form of their suppliers when choosing a reimbursement mechanism.

How does the volume of post-acute care respond to changes in the payment rate?

OBJECTIVE

Measure the effect of changes from 1997 to 2001 in Medicare's payment rates for skilled nursing facilities (SNFs) on the volume of SNF services and services in other settings.

METHODS

This study uses as its source of variation in payment rates the substantial changes that occurred as a result of the Balanced Budget Act of 1997. SNF volume equals the number of Medicare-covered SNF days per fee-for-service beneficiary per year, measured at the level of the hospital service area.

RESULTS

The estimated elasticity of SNF volume with respect to SNF payment rates is 0.13, meaning that an increase in SNF payment rates is associated with an increase in SNF volume and a decrease in payment rates is associated with a decrease in volume-this implies that SNFs exhibit a normal supply curve, consistent with standard economic theory. In an extension of our main analysis, we find that volume changes appear to be driven largely by facility openings and closures. Among facilities that remained open throughout the study period, volume responses were influenced by changes in the number of admissions (rather than length of stay) and changes in payer mix (rather than changes in capacity). We also find that changes in SNF volume primarily reflect net changes in total days of Medicare-covered institutional care, rather than substitution of one setting for another.

Effects of competition on the cost and quality of inpatient rehabilitation care under prospective payment

OBJECTIVE

To determine the effect of competition in postacute care (PAC) markets on resource intensity and outcomes of care in inpatient rehabilitation facilities (IRFs) after prospective payment was implemented.

DATA SOURCES

Medicare claims, Provider of Services file, Enrollment file, Area Resource file, Minimum Data Set.

STUDY DESIGN

We created an exogenous measure of competition based on patient travel distances and used instrumental variables models to estimate the effect of competition on inpatient rehabilitation costs, length of stay, and death or institutionalization.

DATA EXTRACTION METHODS

A file was constructed linking data for Medicare patients discharged from acute care between 2002 and 2003 and admitted to an IRF with a diagnosis of hip fracture or stroke.

PRINCIPAL FINDINGS

Competition had different effects on treatment intensity and outcomes for hip fracture and stroke patients. In the treatment of hip fracture, competition increased costs and length of stay, while increasing rates of death or institutionalization. In the treatment of stroke, competition decreased costs and length of stay and produced inferior outcomes.

CONCLUSIONS

The effects of competition in PAC markets may vary by condition. It is important to study the effects of competition by diagnostic condition and to study the effects across populations that vary in severity. Our finding that higher competition under prospective payment led to worse IRF outcomes raises concerns and calls for additional research.

Ownership status and home health care performance

Few studies have analyzed for-profit and nonprofit differences in the home health care sector. Using data from the National Home and Hospice Care Survey, we found that patients in nonprofit agencies were more likely to be discharged within 30 days under Medicare cost-based payment compared to patients in for-profit agencies. However, this difference in length of enrollment did not translate into meaningful differences in discharge outcomes between nonprofit and for-profit patients, suggesting that-under a cost-based payment system-nonprofits may behave more efficiently relative to for-profits. These results highlight the importance of organizational and payment factors in the delivery of home health care services.

The market for long-term care services

Although a large literature has established the importance of market and regulatory forces within the long-term care sector, current research in this field is limited by a series of data, measurement, and methodological issues. This paper provides a comprehensive review of these issues with an emphasis on identifying initiatives that will increase the volume and quality of long-term care research. Recommendations include: the construction of standard measures of long-term care market boundaries, the broader dissemination of market and regulatory data, the linkage of survey-based data with market measures, the encouragement of further market-based studies of noninstitutional long-term care settings, and the standardization of Medicaid cost data.

Pre-hospital discharge planning: empowering elderly patients through choice

Reductions in the length of stay for acute hospitalization have occurred as a result of Medicare cost containment strategies during the past 20 years. Thus, innovative approaches to the treatment of patients in the acute care hospital setting are necessary, particularly in the practice of discharge planning. The medical literature typically identifies the first day of admission as the time to begin discharge planning in order to minimize the patient's length of stay in the acute care hospital. This strategy has its limitations as elderly patients are often confused by unfamiliar surroundings, surgical anesthesia, postoperative pain, and the rapid pace of hospital recovery typically expected today. Consequently, options for discharge may be limited to the most expedient plan that will ensure safety and continued recovery. This article presents an alternative plan that begins with outpatient education preceding admission and follows the patient throughout the continuum of care including postdischarge.

A research and policy agenda for transitions from nursing homes to home

More than 1 million adults make the transition from nursing homes to the community every year, often using formal health services including Medicare Part A skilled home health care. Although the need for discharge planning is well described, and the risks associated with care transitions are increasingly recognized, there is very limited information about the process and outcomes as patients move from nursing home to home. This paper reviews pertinent published data and health services research as background information and outlines a research agenda for studying these important transitions.

Medicare payment changes and nursing home quality: effects on long-stay residents

The Balanced Budget Act of 1997 dramatically changed the way that Medicare pays skilled nursing facilities, providing a natural experiment in nursing home behavior. Medicare payment policy (directed at short-stay residents) may have affected outcomes for long-stay, chronic-care residents if services for these residents were subsidized through cost-shifting prior to implementation of Medicare prospective payment for nursing homes. We link changes in both the form and level of Medicare payment at the facility level with changes in resident-level quality, as represented by pressure sores and urinary tract infections in Minimum Data Set (MDS) assessments. Results show that long-stay residents experienced increased adverse outcomes with the elimination of Medicare cost reimbursement.

Usefulness of the nursing home quality measures and quality indicators for assessing skilled nursing facility rehabilitation outcomes

OBJECTIVE

To examine the usefulness of the nursing home quality indicators and nursing home quality measures for differentiating among providers from a rehabilitation outcomes perspective.

DESIGN

Retrospective.

SETTING

Skilled nursing facilities (SNFs) across the United States.

PARTICIPANTS

A total of 211 SNFs.

INTERVENTIONS

Not applicable.

MAIN OUTCOME MEASURES

All quality indicators, all quality measures except for CWLS01 (residents who lose too much weight), and a set of rehabilitation outcomes including residualized FIM motor gain, the percentage of patients discharged to community, and the percentage of patients reporting "quite a lot" or "completely" prepared to manage their care at discharge from SNF-based rehabilitation.

RESULTS

No quality measures correlated with any rehabilitation outcomes. Residualized FIM motor gain did not correlate with any quality indicators or quality measures. Only 1 quality indicator-prevalence of daily use of restraints (QI 22)-correlated with the rehabilitation indicator community discharge percentage. The third rehabilitation indicator, prepared to manage care at discharge, correlated (negatively) only with QI 18 incidence of decrease in range of motion. Among the rehabilitation outcomes, residualized FIM motor gain correlated significantly with both community discharge percentage and prepared to manage care at discharge.

CONCLUSIONS

Patients and referrers choosing SNF-based medical rehabilitation need tools that differentiate among prospective providers from a rehabilitation outcomes perspective. Data in this study indicate that nursing home quality indicators and quality measures are inadequate for this purpose.