Long-term care hospitals time discharges to increase payments

Editor's note: Due to a reporter's error, the original headline and text of this article incorrectly identified the facilities examined in this study. The study was of long-term-care hospitals. 

Long-term care hospitals intentionally time patient discharges in order to maximize reimbursement from the Medicare program, according to a new study published in the journal Health Affairs.

The study, conducted by researchers from the University of California at Los Angeles and the Los Angeles Veterans Affairs Medical Center, examined Medicare discharge data for fiscal year 2002 and between 2005 and 2010. The year 2002 was the first year that the Centers for Medicare & Medicaid Services (CMS) began to phase in a new payment system designed not on the basis of costs, but on diagnosis-related groups (DRGs). The phase-in period concluded in 2005.

The new payment system also included a two-day, short-stay outlier payment policy intended to discourage hospitals from transferring short-term patients to nursing facilities. The payments can be dramatically different; a facility would get paid about 60 percent less for DRG 207--patients with a respiratory ailment requiring mechanical ventilation--if they're a short-stay outlier.

Before the short-stay policy began, lengths of stay were evenly distributed, with no noticeable spikes for DRG 207, according to the study. But after the change to the system, researchers noted a substantial increase in the percentage of discharges on and immediately after the threshold. The percentage of patients discharged around the 30-day period nearly tripled, and there were also spikes around 35 and 40 days. Medicare reimbursement to charge ratios also spiked near the 30-day mark.

The results show that "changes in lengths-of-stay and discharge patterns for patients requiring prolonged mechanical ventilation are directly related to the implementation of the short-stay policy under the long-term care hospital [prospective payment system] and the large financial implications created by the short-stay threshold, and not a result of patient-level differences," the study said.

Mechanical ventilation tends to lead to the physical deterioration of patients, with about 60 percent of them dying after five years, McKnight's Long Term Care News reported, although that was not a factor in the study.

The authors suggested that bundled payments for such care might be the best way to discourage the timing of discharges, but noted that these facilities are at an economic disadvantage compared to acute care hospitals when it comes to handling such payments.

To learn more:
- read the Health Affairs study (subscription required)
- check out the McKnight's article

 

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