Lump Sum Payments To Long-term Care Hospitals May Have Created Incentive To Discharge Patients

Yan S. Kim, MD PhD Delivery Science Fellow Division of Research Kaiser Permanente Northern California Oakland, CA 94612MedicalResearch.com Interview with:
Yan S. Kim, MD PhD
Delivery Science Fellow Division of Research
Kaiser Permanente Northern California
Oakland, CA 94612

Medical Research: What is the background for this study? What are the main findings?

Dr. Kim: Long-term care hospitals first emerged in the 1980s as an alternative to lengthy acute-care hospital stays for patients with complex medical problems who need prolonged hospital-level care.  In 2002, Medicare changed its payment method for these facilities from cost-based to a lump sum per admission based on the diagnosis.  Under this system, which is still in place, Medicare pays these hospitals a higher rate for patients who stay a minimum number of days based on the patient’s condition.  Shorter stays are paid much less and longer stays do not necessary generate higher reimbursements.

Using Medicare data, we analyzed a national sample of patients who required prolonged mechanical ventilation – the most common, and among the most costly, conditions for patients in long-term care hospitals – to examine whether this payment policy has created incentives to base discharge decisions on payments.  We found that in the years after the policy’s implementation there was a substantial spike in the percentage of discharges on and immediately after the minimum-stay threshold was met, while very few patients were discharged before the threshold. By contrast, prior to 2002, discharges were evenly distributed around the day that later became the short-stay threshold.  These findings confirm that the current payment policy has created unintended incentives for long-term care hospitals to base the timing of patient discharges on payments and highlight how responsive these hospitals are to payment incentives.

Medical Research: What should clinicians and patients take away from your report?

Dr. Kim: This is a study on the impact of the current Medicare payment policy on the timing of patient discharges from long-term care hospitals.  Our findings have significant and timely implications for policy-makers as they consider alternative ways to structure payments to these hospitals to ensure that the incentives are aligned with the medical needs of patients.

Medical Research: What recommendations do you have for future research as a result of this study?

Dr. Kim: Our study calls for an urgent need to reexamine long-term care hospitals’ role in the care continuum for complex patients and to align incentives so that the care provided is in the best interest of the patients.  In order to successfully overhaul the payment system to ensure that it correctly incentives the provision of high quality care, future studies need to focus on better understanding the types of care provided within long-term care hospitals, the quality of such care, and whether they are delivering on outcomes that matter to patients.

Citation:

Medicare Payment Policy Creates Incentives For Long-Term Care Hospitals To Time Discharges For Maximum Reimbursement
Yan S. Kim, Eric C. Kleerup, Patricia A. Ganz, Ninez A. Ponce, Karl A. Lorenz, and Jack Needleman

Health Aff June 2015 34:6907-915; doi:10.1377/hlthaff.2014.0778


 

 

MedicalResearch.com Interview with: Yan S. Kim, MD PhD, Delivery Science Fellow Division of Research, Kaiser Permanente Northern California, & Oakland, CA 94612 (2015). Lump Sum Payment To Long-term Care Hospitals May Have Created Incentive To Discharge Patients MedicalResearch.com