Post-acute Medicare spending varies by location and how an episode of care is defined, CMS report shows

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A Medicare expenditure for an episode of post-hospital care in 2008 ranged from about $5,700 to $14,500, depending on how the episode was defined, according to a new report from the Centers for Medicare & Medicaid Services.

Investigators examined more than 1.7 million Medicare claims for certain hospital admissions filed in 2008. 

About 39% of these hospital admissions went on to utilize Medicare post-acute services, according to the report released Friday. The researchers analyzed per-episode payments for these services, using various possible definitions for an episode of post-acute care — for example, using a 30-, 60- or 90-day window.

The highest mean payment, measured on a per-PAC user basis, was $14,542, the analysts found. This was for an episode of care defined as any claim starting within 90 days of hospital discharge. This number fell to about $8,800 if the definition was any claim starting within 90 days, excluding acute hospital readmissions and subsequent post-acute services.

The lowest mean payment was $5,745, for the “most restrictive” definition of an episode of care, the research team wrote. This definition was a 30-day fixed period following hospital discharge; if a post-acute claim began in that period but extended beyond it, the researchers “prorated” the days and dollars to only include the services rendered within the 30 days.

The researchers also determined which conditions were most likely to require post-acute care, and examined geographic differences in post-acute Medicare spending.

Major lower-extremity joint replacement was the most common diagnosis requiring post-acute care, followed by intracranial hemorrhage or cerebral infarction.

Massachusetts had the highest number of discharges for post-acute care, at 50.5% of Medicare beneficiaries. Montana had the lowest, at about 32%. Practice patterns and availability of post-acute services contribute to this variation, the researchers noted. For example, skilled nursing facilities are widely available but not every state has a long-term acute care hospital.

The findings are valuable for policymakers considering bundled payment models that offer a single amount to cover a whole episode of care, the authors wrote. These systems have to define what will constitute an episode of care and may even limit bundled payments to certain types of conditions.

Click here to access the complete report, published in the Medicare & Medicaid Research Review. The authors are affiliated with RTI International, the Department of Health and Human Services, The Brookings Institution and CMS.