Trends across institutional settings
in cost and service intensity for
Medicare SNF care
1997 – 2003
Study Objective
„
Kathleen Dalton, PhD , RTI International
CoCo-authors
Jeongyoung Park, doctoral candidate, University of North Carolina School of
of Public Health
To examine changes in average costs and
intensity of services, before and after Medicare
SNF Prospective Payment (PPS), across each of
three institutional settings
Part of larger funded study of rural hospital
participation in SNF care
„ Part of author’
author’s ongoing investigations of
institutional responses to Medicare payment
„
Rebecca T. Slifkin,
Slifkin, PhD, University of North Carolina, Cecil G. Sheps Center for Health
Health Services
Research
Funded through the federal Office or Rural Health Policy, under cooperative agreement with the
N.C. Rural Health Research and Policy Analysis Center.
Working Paper available at:
www.shepscenter.unc.edu/research_programs/rural_program
June 26, 2006
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SNF services not
necessarily similar across settings
Background
„
Academy Health Annual Research
Meeting
Medicare payments for inpatient skilled nursing
payable to:
„
Freestanding facilities
„
HospitalHospital-based units (distinct, certified)
„
“SwingSwing-beds”
beds” – routine acuteacute-care beds in qualifying
rural hospitals
Freestanding
(about 13,000)
(about 1,500)
2002
Admissions
(2.2 mill)
76%
Covered
Days
(54.6 mill)
Average
Length of
Stay
87%
28.3 days
HospitalHospital-based
19%
11%
14.1 days
SwingSwing-beds
6%
2%
8.9 days
(about 1,000)
Source: CMS Statistical Supplement, 2004.
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„
„
Freestanding and HB units: began phasephase-in to
SNF PPS rates payments in July 1998.
SwingSwing-beds started SNFSNF-PPS in 2003.
Swing beds in Critical Access Hospitals exempt
from PPS
„
„
„
„
Ancillary services continue as costcost-based
Routine care had been under a fixed perper-diem but
became costcost-based in 2002 (same rates as acute
routine)
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Presumption:
HopedHoped-for responses to transition from
costcost-based to prospective payment:
Payment systems
„
June 26, 2006
„
„
5
Reduce unneeded services (improved care
efficiency)
Reduce unit costs per service delivered
(improved production efficiency)
Eliminate inefficient providers (mergers,
acquisitions or closures)
Retain / attract new efficient providers
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1
PostPost-PPS changes in number of certified
skilled nursing facilities
Percent change
1997 to 2004
-43%
HospitalHospital-based: urban
rural
Freestanding:
Study Design
urban
rural
„
Descriptive
Population:
„
Outcomes:
„
„
-20%
„
+4%
„
all SNFs filing Medicare cost reports 19961996-2003
Medicare costs, payments and margins
Per diem costs:
„ Therapy
+11%
All
„ NonNon-therapy
+6%
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ancillary services
nursing
„ Routine
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Costs and Payments under SNFSNF-PPS:
Costs and Payments under SNFSNF-PPS:
FREESTANDING FACILITIES
HOSPITAL-BASED UNITS
Non-profit
For-p rofit
2002
2004
500
0
19 98
2000
2002
2004
P ublic
0
0
250
500
dollars per day
250
250
0
2000
250
1998
2004
2002
2004
9
PPS responses:
Change in median ancillary costs per day
SNFPPS p ayme nt per day
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unadjusted cost per day
50
100
150
Median Part A rehab therapy costs per day
20
03
20
01
20
02
20
03
20
01
20
02
19
99
20
00
19
98
0
19
97
20
00
hospital-based
1.00
Hospital-Based
19
99
swing
1.50
Freestanding
19
98
2.00
unadjusted cost per day
50
100
150
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20 00
SNFPPS cost per day
SNFPPS payment per day
0
2002
19
97
20 00
SNFPPS cost per day
unadjusted cost per day
50
100
150
freestanding
0.00
2001
2002
2003
Pt A only
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20
03
2000
19
97
Pt A&B
20
01
20
02
1999
19
99
1998
0
1997
Swing-bed
20
00
0.50
19
98
dollars per day
19 98
P ublic
1998
index
Non-profit
500
500
For-p rofit
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2
unadjusted cost per day
200
400
20
03
20
01
20
02
20
00
19
99
19
98
0
7
3
2
20
0
20
01
20
0
8
9
20
00
19
9
03
20
1
02
20
00
20
0
20
7
99
19
19
„ Absorbing demand
Immediate market exit (mostly urban), but
No apparent cost control among remaining
providers
„ SNFSNF-PPS losses = business as usual
„ Watch
15
June 26, 2006
Surprisingly unrelated to type of
ownership
for trends in PPS vs. CAH swing
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Measurement limitations?
“accounting costs”
costs” ≠ “true costs”
costs”
In freestanding settings
„
Immediate reduction in rehab services in forfor-profit
and nonnon-profit institutions
In hospitalhospital-based settings
Routine cost perper-diems are systematically
understated due to averaging of skilled with
unskilled patients in “dual”
dual” units. But…
But…
„
Closure was associated with forfor-profit status and
higher cost, higher Medicare utilization
„ But continued operations with severe SNFSNF-PPS
losses still common in profit and nonnon-profit; also in
metro and micropolitan areas
„
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from closed HB units? Maybe
Needs a detailed study from SNF claims and MDS
data
„ Costs could decline in future years with PPS
implementation
„
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98
0
19
9
SwingSwing-beds
„
„
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Still the setting with shortest stays, but no longer
least intensive
„ Increase in services could reflect change in patients
HospitalHospital-based:
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„
Immediate reduction in overover-used services
„ Control of unit costs elsewhere (reduction in real
dollars)
„ Healthy PPS surplus
„
Text text text
June 26, 2006
„
Freestandings:
„
Swing-bed
(carve-out rates only)
03
13
„
„
Hospital-based
20
1
02
20
20
0
99
98
00
20
19
19
19
9
7
0
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What is going on?
„
19
9
19
97
unadjusted cost per day
200
400
20
03
20
01
20
02
20
00
19
99
19
98
0
19
97
20
03
20
01
20
02
20
00
19
99
19
98
Swing-bed
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„
Freestanding
0
Hospital-Based
19
9
unadjusted cost per day
50
100
150
unadjusted cost per day
50
100
150
unadjusted cost per day
50
100
150
19
97
0
Freestanding
unadjusted cost per day
200
400
Median Part A routine costs per day
Median Part A non-therapy ancillary costs per day
„
HospitalHospital-based per diems include more fixed
overhead costs. But…
But…
„
„
17
Overstates profit in freestanding – HB units have
fewer unskilled days
Explains only part of the difference
HB units truly have more and better paid nurses
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3
Question: what is the business objective
of a hospitalhospital-based SNF?
„
Meeting clinical demand for services at more complex
end of SNF care spectrum
„
„
If so, unclear why SNFPPS casecase-mix adjustment doesn’
doesn’t
adjust for this
„
Accepted wisdom, but not borne out by lengthlength-ofof-stay
differences
„
Put unused beds & space to “productive”
productive” use?
„
(Well, not too productive given these losses…
losses…)
June 26, 2006
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Some of it explainable by accounting artifact?
„
Discharge management for DRG patients?
„
„
Interpreting apparently nonrational responses
19
In aggregate, do we know if marginal income from
SNF services is greater than marginal costs?
Turning to organization theory to generate
alternative explanations/ models of strategic
response
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