title: Medicare Payment Policy Creates Incentives For Long-Term Care Hospitals To Time Discharges For Maximum Reimbursement.
abstract: Long-term care hospitals are postacute care facilities for patients requiring extended hospital-level care. These facilities are reimbursed by Medicare under a prospective payment system with a short-stay outlier policy, which results in substantially lower payments for patients discharged before a diagnosis-related group-specific short-stay threshold. Using Medicare data, we examined the impact of the short-stay policy on lengths-of-stay and Medicare reimbursement among patients in long-term care hospitals who require prolonged mechanical ventilation. After accounting for case-mix and facility-level differences, we found that discharges for reasons other than death in the period 2005-10 were most likely to occur on the day of or immediately after the short-stay threshold; this held true regardless of facility ownership. In contrast, live discharges in 2002—the year before the prospective payment system started phasing out cost-based payment—were evenly distributed around the day that later became the short-stay threshold. Our findings confirm that the short-stay outlier payment policy created a strong financial incentive for long-term care hospitals to time patient discharges to maximize Medicare reimbursement. The results suggest that the new very-short-stay policy implemented in December 2012 could have a similar effect.
authors.affiliation: Yan S. Kim (yan.s.kim@kp.org) is a Delivery Science Fellow in the Division of Research at Kaiser Permanente Northern California, in Oakland, California. At the time this research was conducted, she was a PhD candidate in the Department of Health Policy and Management, Fielding School of Public Health, University of California, Los Angeles (UCLA).
authors.forename: Yan S
authors.initials: YS
authors.lastname: Kim
authors.affiliation: Eric C. Kleerup is a clinical professor of pulmonary and critical care medicine at UCLA.
authors.forename: Eric C
authors.initials: EC
authors.lastname: Kleerup
authors.affiliation: Patricia A. Ganz is a Distinguished Professor in Health Policy and Management and Medicine, Fielding School of Public Health and David Geffen School of Medicine, both at UCLA.
authors.forename: Patricia A
authors.initials: PA
authors.lastname: Ganz
authors.affiliation: Ninez A. Ponce is a professor in the Department of Health Policy and Management, Fielding School of Public Health, UCLA.
authors.forename: Ninez A
authors.initials: NA
authors.lastname: Ponce
authors.affiliation: Karl A. Lorenz is an associate professor of medicine at the Veterans Affairs Greater Los Angeles Healthcare System, in California.
authors.forename: Karl A
authors.initials: KA
authors.lastname: Lorenz
authors.affiliation: Jack Needleman is the Fred W. and Pamela K. Wasserman Professor and Chair of the Department of Health Policy and Management, Fielding School of Public Health, UCLA.
authors.forename: Jack
authors.initials: J
authors.lastname: Needleman
mesh_terms: D000368:Aged; D000369:Aged, 80 and over; D005260:Female; D005102:Health Expenditures; D006801:Humans; D008134:Long-Term Care / Q000191:economics*; D008297:Male; D006278:Medicare / Q000191:economics; D010351:Patient Discharge / Q000191:economics*; D011445:Prospective Payment System / Q000191:economics*; D012052:Reimbursement, Incentive; D012121:Respiration, Artificial / Q000191:economics; D014481:United States
keywords: Cost of Health Care; Health Reform; Health Spending; Medicare; Special Populations