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Medicare spending for beneficiaries receiving long-term care

October 26, 2010 in Medicare, Nursing Homes | 1 comment

Medicare spends a lot of money on beneficiaries living in nursing homes.  How expensive are these beneficiaries:

  • Six percent of Medicare beneficiaries spend some time in a long-term care facility, but these same beneficiaries make up 17% of total Medicare cost.
  • Three percent of Medicare beneficiaries spent an entire year in a long-term care facilities.  These beneficiaries make up 5% of all Medicare cost.
  • Of these 3% of these of Medicare beneficiaries who spent an entire year in a long-term care facilities, 41% where in the top quartile of spending and 17% were in the top decile.
  • Among beneficiaries who spend time in a LTC facility, but died before the end of the year, 69% of beneficiaries ranked in the top spending quartile and 31% in the top Medicare spending decile.
  • Thirty eight percent of beneficiaries living in a LTC facility were admitted to a hospital at some point during the year.  Over half (51%) of LTC residents had at least one emergency room visit.

So Medicare beneficiaries in long-term care facilities are expensive…who cares?  These beneficiaries are also likely sicker than other patients and need this skilled care.  Further, they would cost Medicare more money than a typical patient regardless of where they live.

Although LTC residents are expensive, much of their cost could be avoided.  According to a KFF report, 24 percent of all hospitalizations for long‐term care facility residents in 2006 were potentially preventable. In particular, “greater attention to transitions to and from the hospital could also help to minimize costs associated with preventable complications.”

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How Medicare payment policy affects SNF incentives to hospitalize patients

October 25, 2010 in Medicare, Nursing Homes | No comments

Under Medicare Part A, beneficiaries can receive coverage for care provided by skilled nursing facilities (SNFs), also known as nursing homes.  Between 2000 and 2007, however, the rate of potentially avoidable re-hospitalizations for five key conditions (congestive heart failure, respiratory infection, urinary tract infection, sepsis, and electrolyte imbalance) increased from 13.7% to 18.5%. One potential explanation for this increase is that Medicare reimbursement policy may incentivize SNFs to transfer patients to acute impatient care.  Today, I examine a Kaiser Family Foundation brief which examines these SNF incentives.

Background

A SNF is a long-term care facility  providing skilled care. This is different from general nursing facilities (NF) who provide custodial rather than skilled care. Medicare pays for most SNF care whereas Medicaid is the primary payor for most NF care.  All SNF Part A inpatient services  are paid under a prospective payment system (PPS). In the PPS, providers receive a daily base rate which is adjusted for case mix. “Assignment to a RUG is based on a number of considerations, such as the patient’s need for certain services, the presence of certain conditions, and an index based on the patient’s ability to perform independently four activities of daily living.”  SNFs can earn extra revenue through bed holds and reserved bed arrangements.   In the bed hold scenario, residents transferred to an inpatient facility pay the SNF to keep the same bed. States regulate bed holds.  For instance, California mandates that a bed must be held for 7 days while Wisconsin mandates a minimum bed-hold of 15 days.  Additionally, impatient facilities may reserve beds.  This way, the hospital will guarantee placement of their discharged patients.

Care is provided by a number of different provider types, but Medicare mandates that “each resident must be seen by a physician at least once every 30 days for the first 90 days after admission, and at least once every 60 days thereafter.”

There are two types of models for SNFs and NF. In a closed staffing model, the facility directly employs the physician and pays them a salary. In an open staffing model, community physicians care for residents.

The remainder of this post will examine how certain Medicare payment policies may or may not encourage SNFs to send residents to acute care facilities unnecessarily.
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