Medicare Advantage and Post-Acute Care: Saving Money or Shifting Costs?
In its April 2020 report, the Medicare Board of Trustees projects that the Hospital Insurance (HI) Trust Fund – basically, funding for Part A – will be depleted by 2026; Medicare will only be able to pay out 90 percent of benefits available under current law in that year. With financial circumstances likely to worsen as a result of COVID-19, Congress will be looking for ways to extend the solvency of the Medicare program over the next few years.
One approach favored by some would be to accelerate the growth of Medicare Advantage (MA), which would shift financial risk from the Federal Government to the private insurers that offer an MA plan. In 2020, approximately 36 percent of Medicare beneficiaries are enrolled in an MA plan, which receives a fixed fee per enrollee, adjusted for clinical characteristics. Most beneficiaries are in Traditional Medicare (TM), but the Medicare Trustees project MA enrollment to continue to grow and reach 43.3 percent by 2030.
Because MA plans receive fixed payments for their enrollees, they have an incentive to control healthcare use, including use of post-acute care (PAC), i.e., home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs). PAC is perceived as a potential area for savings in Medicare, particularly after research has identified it as a key driver of geographic variation in TM. TM’s spending on PAC is significant, estimated at $58.5 billion in 2018.
In a recent study, researchers at KNG Health Consulting compared PAC utilization in TM and MA as well as short-term acute care hospital (STACH) average length of stay by patient severity of illness (SOI) and select clinical conditions. The study found that for all levels of SOI and selected clinical conditions, the TM discharge rates to facility-based PAC (SNF, IRF, and LTCH) were higher than for MA beneficiaries, although differences in facility-based PAC rates between TM and MA narrowed some for the highest severity patients. For patients with the highest SOI or the selected clinical conditions, MA beneficiaries had longer average length of stay at STACHs compared with TM beneficiaries.
While the study findings are consistent with other recent studies that found MA enrollees were less likely to receive PAC services, it provides additional insights on variation in use of PAC among TM and MA beneficiaries. First, the observed differences in PAC use for low severity beneficiaries suggests there may be opportunities for TM savings among these patients. Second, MA may substitute longer hospital stays for facility-based PAC and, specifically, for care in LTCHs, which care for the most severely ill Medicare beneficiaries.
The study suggests that MA plans generate PAC savings by pushing costs onto short-term acute care hospitals for the most severely ill patients. All good? Medicare saves money and MA plans compensate hospitals for the longer lengths of stay….or not. Studies have documented that MA plans pay hospitals the same, on average, as TM or lower. So, growth of MA shifts financial risk from TM onto hospitals, at least with respect to PAC use, to what effect? Lower hospital margins– yes, but a key unanswered question is the impact on beneficiary outcomes. With the relatively recent release of MA encounter data, researchers may be able to start answering this key question.
In its April 2020 report, the Medicare Board of Trustees projects that the Hospital Insurance (HI) Trust Fund – basically, funding for Part A – will be depleted by 2026; Medicare will only be able to pay out 90 percent of benefits available under current law in that year. With financial circumstances likely to worsen
Use of Glucarpidase (Voraxaze®) to Treat Methotrexate Toxicity in Cancer Patients Associated with Lower Length-of-Stay and Mortality Rates
Glucarpidase (Voraxaze®) is used to treat methotrexate (MTX) toxicity in patients with delayed MTX clearance due to impaired renal function. Using 2010-2017 Medicare claims data, KNG Health researchers assessed outcomes of glucarpidase patients relative to those experienced by patients treated for presumed MTX toxicity using other therapies. Researchers examined hospital length of stay (LOS), mortality, and readmission rates for Medicare cancer patients with delayed clearance of MTX treated with glucarpidase. They found that Medicare cancer patients with presumed MTX toxicity receiving conventional treatment experience long hospitalizations, high intensive care unit (ICU) use and high mortality. Glucarpidase patients had lower LOS, inpatient mortality and 90-day mortality than the non-glucarpidase patients. The study was published in ClinicoEconomics and Outcomes Research.
Links: Publication
Services : Health Economics & Outcomes Research Expertise: Comparative Effectiveness, Health Outcomes and EvaluationGlucarpidase (Voraxaze®) is used to treat methotrexate (MTX) toxicity in patients with delayed MTX clearance due to impaired renal function. Using 2010-2017 Medicare claims data, KNG Health researchers assessed outcomes of glucarpidase patients relative to those experienced by patients treated for presumed MTX toxicity using other therapies. Researchers examined hospital length of stay (LOS), mortality,
New Medicare Payment Policy Resulted in Poorer Outcomes for Patients Severe Wounds
In Fiscal Year (FY) 2016, Medicare began phasing in a dual payment system for long-term care hospitals (LTCHs) that would pay an LTCH differently for cases meeting criteria (“qualified” cases) and cases that did not meet criteria (“site-neutral” cases). Under a fully implemented system, for LTCHs to meet criteria for a qualified case, a patient must have been discharged from a STACH immediately prior to the LTCH stay, and have spent at least 3 days in an intensive care unit during the STACH stay or received at least 96 hours of mechanical ventilation in the LTCH. For site-neutral cases, an LTCH will be paid the short-term acute care hospital (STACH) amount or its costs, whichever amount is lesser.
LTCHs, which treat chronically critically ill and medically complex patients who require hospital-level care for extended periods, are a particularly important care setting for severe wound patients. Medicare Fee-for-Service patients hospitalized with severe wounds in 2015 were six times more likely to be discharged to an LTCH compared to all Medicare discharges (7.1% vs 1.2%). In FY 2015, 54% of severe wound patients treated in LTCHs would not have met criteria, and LTCHs treating these patients would have been at risk of receiving payment reductions between 20–40% for these cases during the phase-in period.
KNG Health researchers developed a difference-in-difference model to examine the effects of the recent changes in the LTCH Medicare payment policy on treatment patterns and outcomes for site-neutral severe wound patients. The findings, published in the Journal of Medical Economics, show that the new patient criteria for LTCHs were associated with fewer site-neutral severe wound cases going to LTCHs, and higher readmissions and post-discharge sepsis.
Links: Publication
Services : Health Economics & Outcomes Research, Payment Policy & Delivery System Innovation, Practice Area - Healthcare Reform and Payment Innovation Expertise: Health Outcomes and Evaluation, Medicare, Payment and Delivery System InnovationIn Fiscal Year (FY) 2016, Medicare began phasing in a dual payment system for long-term care hospitals (LTCHs) that would pay an LTCH differently for cases meeting criteria (“qualified” cases) and cases that did not meet criteria (“site-neutral” cases). Under a fully implemented system, for LTCHs to meet criteria for a qualified case, a patient
The Effects of Calcitonin Gene-Related Peptide Inhibitors on Migraine Days, Healthcare Use, and Workplace Productivity: A Markov Model Approach
Migraine is a debilitating condition in which painful headaches occur frequently. Treatments for migraines, such as acute care treatment and preventive therapy, can help migraine sufferers manage their pain and reduce their frequency. However, there have been few recent improvements in the market for preventive migraine therapies. Calcitonin gene-related peptide (CGRP) inhibitors are a new class of preventive migraine drugs that may address the need for new, effective treatments for migraines.
In this study, we estimate the value of CGRP inhibitor treatment for chronic and episodic migraine sufferers. We used a Markov model framework with four primary outcomes: (1) migraine days; (2) acute care drug treatment days; (3) number of physician and emergency room visits; and (4) workplace productivity. We considered the impact of CGRP inhibitors on patients who are not currently on preventive therapy because existing non-CGRP inhibitor treatments are ineffective or intolerable for these patients.
Use of CGRP inhibitors was on average associated with fewer migraine days per year (-18.68/-29.20 for EM/CM), fewer triptan uses per year (-3.21/-5.04), more physician visits for migraine per year (1.03/1.02), fewer ER visits per year (-0.06/-0.10), higher probability of full-time (0.03/0.02) and part-time employment (0.01/0.00), fewer lost productive hours per year (-39.69/-21.31), and less indirect cost per year (-$20,327/-$11,176). Effects were generally greater for individuals with higher response to the drugs and varied by age and sex.
If all migraine sufferers not on preventive medicine used CGRP inhibitors, we estimate national indirect cost savings of $390 billion for EM and $6 billion for CM over 10 years, as well as national reductions in migraine days per year of 358 million for EM and 16 million for CM.
Links: Report
Services : Health Economics & Outcomes Research Expertise: Comparative EffectivenessMigraine is a debilitating condition in which painful headaches occur frequently. Treatments for migraines, such as acute care treatment and preventive therapy, can help migraine sufferers manage their pain and reduce their frequency. However, there have been few recent improvements in the market for preventive migraine therapies. Calcitonin gene-related peptide (CGRP) inhibitors are a new
Quality Measure Development and Assessment for Ambulatory Surgery Centers
KNG Health provides statistical support to The Ambulatory Surgery Center Quality Collaboration (ASC QC) to evaluate quality measures proposed for inclusion in CMS’ ASC Quality Reporting Program. KNG Health has conducted statistical evaluation of select measures in terms of reliability, validity, feasibility, and interpretability based on data collected through pilot testing. As part of its quality measure work for ASC QC, KNG Health has also developed a data collection tool for measure reliability testing, which included automation and consistency checks to minimize data entry error. In addition, KNG Health has analyzed data from Culture of Patient Safety Survey data from ambulatory surgery centers and developed both facility-level and organizational-level reports that use data visualization tools to illustrate analysis results.
Services : Program Evaluation and Monitoring Expertise: Quality Measurement and Provider PerformanceKNG Health provides statistical support to The Ambulatory Surgery Center Quality Collaboration (ASC QC) to evaluate quality measures proposed for inclusion in CMS’ ASC Quality Reporting Program. KNG Health has conducted statistical evaluation of select measures in terms of reliability, validity, feasibility, and interpretability based on data collected through pilot testing. As part of its
Comparative Outcome and Market Analyses for Long Term Acute Care Hospitals
KNG Health was contracted by a long-term care hospital (LTCH) to conduct a series of studies to better understand (1) the value of care provided by the hospital to patients in its market area; (2) the value it provides to short term acute care hospitals, and (3) referral patterns in its market. To address these objectives, KNG Health conducted a series of studies using Medicare claims data. In the first study, we compared mortality, readmissions, discharge to community, and Medicare spending per beneficiary between patients treated in the client’s LTCH to similar patients treated in other LTCHs and skilled nursing facilities (SNFs) in the same market area. We used propensity score matching to construct a comparison group of patients who have similar clinical characteristics to the population of the LTCH examined. In the second study, we conducted a market analysis that identifies the referral patterns among patient discharged from short-term acute care hospitals in the LTCH’s market area. This analysis revealed the LTCH’s market share among cases that fulfill LTCH patient criteria as well as the share of cases that are referred to other providers. The analysis was conducted for cases that fulfilled LTCH patient criteria, and the results were presented separately by MS-DRG. In the third study, we predict cost savings that short-term acute care hospitals can experience by transferring their cases to the LTCH earlier. We estimate a predictive model of average hospital costs and use the model’s results to predict cost savings under different counterfactual scenarios regarding length of stay. The findings are incorporated into an interactive Excel tool that allows the user to identify predictions for different MS-DRGs and length of stays.
Services : Health Economics & Outcomes Research Expertise: Comparative Effectiveness, Health Outcomes and Evaluation, MedicareKNG Health was contracted by a long-term care hospital (LTCH) to conduct a series of studies to better understand (1) the value of care provided by the hospital to patients in its market area; (2) the value it provides to short term acute care hospitals, and (3) referral patterns in its market. To address these
