Results from Most Recent AllianceAHCA Data and Thoughts on 2004

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Results from Most Recent Alliance/AHCA Data and
Thoughts on 2004
Donald Muse, Ph.D. September 24, 2003
Muse Associates 1775 I Street, NW, Suite
520 Washington, DC 20006 202-496-0200 www.muse-ass
ociates.com
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Table 1 The Alliance/AHCA Database Represents
Data from nearly 3,000 Facilities in the Second
Quarter of 2002
Source Alliance/AHCA Database
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Table 2 Summary of All Data Submitted to the
Alliance/AHCA Database
Source Alliance/AHCA Database
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Table 3 Matched Sample Summary of Data Submitted
to the Alliance/AHCA Database (providers who
contributed data for all eight quarters in
analysis)
Source Alliance/AHCA Database
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Percent Change First Quarter of 2001
Through Fourth Quarter of 2002

• Medicare
• Per Diems Increased 3.7
• This Reflects a Decrease of 8.1 in the Fourth
  Quarter of 2002
• Medicaid
• Medicaid Per Diems Increased 14.5
• Other Payor
• Per Diems Increased 5.4

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Conclusions

• We are two years ahead of CMS
• Trends in Medicare per diems closely track
  legislative changes

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Other Data Results

• Average Medicare Days per Facility Increased
  15.5 Over the Two Years
• Data by RUG III categories shows that the
  distribution of days among the RUG groups is
  slowly shifting toward higher acuity categories
• Data from Cost Report Abstract still in analysis
  stage

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Graph 1 Historic and Projected SNF Medicare Per
Diems (Projections Assume Rug Refinement Add-on
Remains through 2004, a Market Basket Increase of
3 in 2004 and a Market Basket Correction of 3.26
Added to the Base in 2004)
Source Muse SNF Baseline
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Graph 2 Comparison of Actual Data to Previous
Muse Projections for Fiscal Years 1999 Through
2003
Muse Projections
Actual Data
Source Alliance/AHCA Database
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Conclusion Our Model Works
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Thoughts on 2004

• Highly Likely 2004 Numbers Scenario
• Feb/March CBO releases a new baseline with
  Medicare spending up significantly
• We should be able to hold SNF baseline increases
  to less than 10 percent. Unfortunately, price of
  legislative fixes will increase.
• March/April the search for the guilty providers
  takes center stage
• Rest of the Year Medicare reform/cuts discussed

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The Medicare SNF Numbers Game in 2004

• Suggestions on our Defense
• We must talk in relative terms, not percentages
• We must show that increased admissions, and
  acuity increases, which are hospital driven, are
  driving Medicare SNF increases

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The CBO/CMS Model ? Total Expenditures ?
Population X ? Price X ? Utilization
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Total Expenditures
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Graph 3Growth in Medicare Hospital and SNF
Expenditures in Billions of Dollars
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Population
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CBO Population Assumptions

• CBO uses the same population increase for almost
  all Medicare providers. Therefore, differing
  increases in individual provider expenditure
  growth can not be explained by differences in
  population growth.
• CBO Adds 0.1 to Medicare SNF projections for
  aging of the Medicare population.
• Actual CBO population percent increases are 1.5
  in 2004 growing to 3.0 in 2013 for SNFs.

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Price
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Graph 4 Comparison of Consumer Price Index for
Medical Care and SNF Medicare Care Index
CPI-M
SNF Medicare Rates
Source Alliance/AHCA Database and U.S. Bureau of
Labor Statistics March 1998 100
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Conclusion SNF Medicare Per Deim Rates have
Increased Less Than Overall Medical Price
Inflation
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Graph 5 Comparison of Price Indices for Medicare
Providers Years 1999 Through 2003
CPI-Hospitals
CPI-Prescription Drugs
SNF Medicare Rates
CPI-M
Source Alliance/AHCA Database and U.S. Bureau of
Labor Statistics March 1998 100
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Conclusion SNF Medicare Per Deim Rates have
Increased Far Less Than Price Inflation for
Hospitals or Prescription Drugs
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Utilization
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CBO Utilization Assumptions

• Admissions Approximately 2.7 increase in both
  hospitals and SNF admissions
• Acuity Increases CBO currently adds
  approximately 1.8 to the SNF baseline for
  increases in average length of stay (ALOS)

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What the Alliance/AHCA Data Suggest on Utilization

• Admissions The data suggest that the 2.7
  percent CBO is using is realistic
• Acuity Increases The data suggests that ALOS
  has increased at approximately 3.3 percent, not
  the 1.8 percent CBO is using

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Conclusion Relative to hospitals, the argument
can be made that increases in acuity of patients
are driving increases in SNF utilization
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The Medicare SNF Numbers Game in 2004

• Suggestions for our Defense
• We must talk in relative terms, not percentages
• We must show that growth in admissions, and
  acuity increases, which are hospital driven, are
  driving Medicare SNF increases

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