Do Unprofitable Individuals Face Limited Access to Skilled Nursing Facility Care

1
Do Unprofitable Individuals Face Limited Access
to Skilled Nursing Facility Care?

• Chapin White, PhD
• National Bureau of Economic Research
• GSA Annual Scientific Meeting
• San Diego, November 23, 2003
• chapin_white_at_post.harvard.edu

2
Presentation Outline

• Provider payments access vs. efficiency
• casemix adjustment can help
• Medicare's new prospective payment system (PPS)
  for skilled nursing facilities (SNFs)
• is casemix adjustment working?
• Findings
• access to SNF care limited for some types of
  patients

3
Payment Systems

• Cost reimbursement
• providers reimbursed for costs
• maintains access, but
• no incentive to reduce costs
• Prospective payment
• payments set in advance ("prospectively")
• higher costs ? provider loses
• incentive to reduce costs, but
• also incentive to avoid high-cost individuals

4
Casemix Adjustment

• Can improve prospective payment
• Payments adjusted for patient type
• higher expected costs ? higher payments
• high-cost patients more attractive (maybe)
• Medicare casemix examples
• Hospital Diagnosis-Related Groups (DRGs)
• Home health Home Health Resource Groups (HHRGs)

5
Casemix Adjustment in SNFs

• Resource Utilization Groups, v3 (RUG-III)
• 44 groups
• minutes of rehab is main driver
• 500 mins/week ? group "RVB" ? 330.22/day
• 150 mins/week ? group "RMB" ? 279.99/day
• Rx, inhalation therapy make little difference
• ? rehab patients attractive
• ? IV med patients unattractive

6
Research Strategy

• Are Rx patients less profitable than rehab?
• Do SNFs avoid Rx patients?
• Data
• linked Medicare hospital and SNF claims
• 1997 (pre-PPS) through 2000 (post-PPS)
• each hospital stay defined as "high" or "low"
  rehab, and "high" or "low" Rx
• measures profitability to SNF, discharged to
  SNF

7
Findings Profitability under PPS
"Profitability" is the difference between mean
Medicare payments per resident per day and SNF
costs per resident per day, measured in the
post-PPS period. SNF costs per day are measured
using Medicare claims adjusted the appropriate
cost-to-charge ratios.
8
Findings Change in Discharged to SNF ('97-'00)
The " discharged to SNF" is the fraction of
acute-care hospital stays which were followed by
a Medicare-covered SNF stay. Hospital stays are
categorized as having "high" or "low" predicted
rehabilitation costs and "high" or "low"
predicted prescription drug costs on the basis of
detailed diagnostic information and charges from
the hospital stay.
9
Conclusions

• RUG-III does not do a good job of adjusting for
  patient characteristics
• ? high-Rx patients are unprofitable
• SNFs avoid admitting unprofitable patients
• Casemix adjustment matters
• Relevant to
• payments to other types of providers
• health insurance markets