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.

Medicare spending and outcomes after postacute care for stroke and hip fracture.

BACKGROUND: Elderly patients who leave an acute care hospital after a stroke or a hip fracture may be discharged home, or undergo postacute rehabilitative care in an inpatient rehabilitation facility (IRF) or skilled nursing facility (SNF). Because 15% of Medicare expenditures are for these types of postacute care, it is important to understand their relative costs and the health outcomes they produce. OBJECTIVE: To assess Medicare payments for and outcomes of patients discharged from acute care to an IRF, a SNF, or home after an inpatient diagnosis of stroke or hip fracture between January 2002 and June 2003. RESEARCH DESIGN: This is an observational study based on Medicare administrative data. We adjust for observable differences in patient severity across postacute care sites, and we use instrumental variables estimation to account for unobserved patient selection. STUDY OUTCOMES: Mortality, return to community residence, and total Medicare postacute payments by 120 days after acute care discharge. RESULTS: Relative to discharge home, IRFs improve health outcomes for hip fracture patients. SNFs reduce mortality for hip fracture patients, but increase rates of institutionalization for stroke patients. Both sites of care are far more expensive than discharge to home. CONCLUSIONS: When there is a choice between IRF and SNF care for stroke and hip fracture patients, the marginal patient is better off going to an IRF for postacute care. However, given the marginal cost of an IRF stay compared with returning home, the gains to these patients should be considered in light of the additional costs.

Effects of payment changes on trends in post-acute care.

OBJECTIVE: To test how the implementation of new Medicare post-acute payment systems affected the use of inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs), and home health agencies. DATA SOURCES: Medicare acute hospital, IRF, and SNF claims; provider of services file; enrollment file; and Area Resource File data. STUDY DESIGN: We used multinomial logit models to measure realized access to post-acute care and to predict how access to alternative sites of care changed in response to prospective payment systems. DATA EXTRACTION METHODS: A file was constructed linking data for elderly Medicare patients discharged from acute care facilities between 1996 and 2003 with a diagnosis of hip fracture, stroke, or lower extremity joint replacement. PRINCIPAL FINDINGS: Although the effects of the payment systems on the use of post-acute care varied, most reduced the use of the site of care they directly affected and boosted the use of alternative sites of care. Payment system changes do not appear to have differentially affected the severely ill. CONCLUSIONS: Payment system incentives play a significant role in determining where Medicare beneficiaries receive their post-acute care. Changing these incentives results in shifting of patients between post-acute sites.