Unbiased Analysis of Today's Healthcare Issues

Managing post-acute care cost

Written By: Jason Shafrin - Feb• 23•16

Medicare’s move towards bundling payment for acute and post-acute care means that hospitals have an incentive to carefully monitor care received after discharge.  But what are the key drivers of post-acute care cost: hospital readmissions? use of any post-acute care? type of post-acute care used?

A paper by Huckfeldt et al. (2016) examines Medicare claims data from  2007-2008 to answer this question.  They find:

When comparing high- and low-quartile [post-acute spending] hospitals, readmissions were attributable for most of the difference in costs for [acute myocardial infarction] AMI MS-DRGs (74 93 percent). Post-acute care was responsible for most of the cost difference for joint replacement (72 and 92 percent), stroke (75 88 percent), and hip and femur procedures (74 88 percent).

Not only does avoiding readmission and the use of any post-acute care reduce cost, but the type of care received also affects cost.

Among conditions where post-acute care was important, the mechanism also varied. For the orthopedic conditions, the differences in spending were driven by the relative ratio of IRF versus SNF care (lower spending hospitals used more SNF rather than IRF). For nonorthopedic admissions, patients were more likely to receive any SNF care at higher cost hospitals.

Although this exercise is useful for understanding what are the key cost drivers, the analysis focuses only on cost, not on how these services improve outcomes.  In fact, they even admit that:

We also did not account for differences in outcomes or quality of care across hospitals with different levels of episode spending. For example, while IRF care is more expensive than SNF care, Gage et al. (2011) find greater improvements in self-care function for patients in IRFs.

Balancing cost and quality is a key question.  Cost breakdowns are a useful start, but the true value of the analysis of post-acute care can only be determine when simultaneously measuring patient outcomes as well.

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