Over the past year, the COVID-19 pandemic has ravaged the country and overwhelmed the U.S. healthcare system with overflowing intensive care units (ICUs) and overworked medical professionals. Although short-term acute care hospitals (STACHs) are the nation’s frontline in treating severe COVID-19 cases, the post-acute care (PAC) sector—home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), and long term care hospitals (LTCHs)—has played an important supporting role. Early on in the pandemic, some advocated for an expanded role for LTCHs and SNFs to aid in the response to the pandemic, while others noted that limits in institutional PAC capacity would potentially require greater use of HHAs to address the pandemic. Now, a year into the public health emergency, an examination of Medicare claims data confirms the role that the PAC sector played during the initial months of the nation’s COVID-19 response.
Medicare Post-Acute Care Patterns Shifted Under COVID-19 Pandemic Relative to 2019
Medicare fee-for-service (FFS) claims data from the first wave of the pandemic (April 2020-June 2020) indicate that PAC utilization patterns shifted, in terms of the distribution of patients across PAC settings and patient mix. Despite an overall decrease in PAC volume, compared to the previous year, the percent of patients transferred from a STACH to a PAC setting increased in the second quarter of 2020. However, a smaller share of STACH patients was transferred to SNFs relative to 2019, while a significantly greater share was discharged with a home health referral. In addition, the transfer rate to LTCHs was almost 4 times higher for COVID-19 patients than non-COVID-19 patients in June 2020. While COVID-19 patients were also more likely to transfer to a SNF than non-COVID-19 patients (twice as likely in June 2020), the opposite is true for patients transferred to an IRF or HHA.
Between April and June 2020, Medicare Volume Was Down and Patient Complexity Was Up in PAC
LTCHs and SNFs Shifted their Focus to COVID-19 Patients
The transfer rate of COVID-19 cases to LTCHs and SNFs was significantly higher than for non-COVID-19 cases. In June 2020, a Medicare beneficiary with COVID-19 was almost 4 times more likely to go to an LTCH than a non-COVID-19 patient. During the same period, COVID-19 patients were twice as likely to go to a SNF as non-COVID-19 patients. In contrast, COVID-19 patients were roughly half as likely to go to an IRF or HHA as non-COVID-19 patients. The large differential in likelihood of transferring to an LTCH between COVID-19 and non-COVID-19 patients demonstrates the significant role these specialty hospitals have played during the public health emergency.
Future Work Needed to Gain a Deeper Understanding of PAC Role in COVID-19 Pandemic
At the beginning of the pandemic, the Centers for Medicare & Medicaid Services (CMS) instituted a number of waivers for PAC providers that provided some needed flexibility in responding to the needs of their communities. While our findings should be considered preliminary because it is based on an early release of Medicare claims data, our findings suggest that the waivers had the intended effect of allowing PAC providers to address the pandemic more easily.
Once we get past the acute phase of the pandemic, there will undoubtedly be a thorough assessment of where the U.S. healthcare system succeeded and struggled, with identification of ways to improve the effectiveness and equity of our care delivery systems. That work should include an assessment of PAC. Understanding PAC utilization patterns during the public health emergency may help shed light on the roles of these different PAC providers in caring for Medicare beneficiaries and how those roles can be improved going forward.
 Medicare Payment Advisory Commission. A Data Book: Health Care Spending and the Medicare Program. July 2020. Chapter 8 accessed at http://medpac.gov/docs/default-source/data-book/july2020_databook_sec8_v2_sec.pdf?sfvrsn=0Services : Blog, Practice Area - Evaluation and Health Economics Expertise: COVID-19, Healthcare Cost and Utilization, Medicare, PAC, post-acute care
Over the past year, the COVID-19 pandemic has ravaged the country and overwhelmed the U.S. healthcare system with overflowing intensive care units (ICUs) and overworked medical professionals. Although short-term acute care hospitals (STACHs) are the nation’s frontline in treating severe COVID-19 cases, the post-acute care (PAC) sector—home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient
A growing share of Medicare beneficiaries are discharged to home health care to receive post-acute care at home after their acute care hospital stay. MedPAC reports that between 2012 and 2017, the percentage of hospitalized Medicare fee-for-service beneficiaries discharged to home health care increased from about 16% to 18%, and the two-percentage-point increase accounted for the majority of increase in discharges to all post-acute care settings. While home health use has increased over the last several years, nearly 1 in 3 Medicare beneficiaries who are referred to home health care after hospital stay do not receive home health care, according to our recent study published in JAMDA: The Journal of Post-Acute and Long-Term Care Medicine.
The study focuses on hospitalized Medicare beneficiaries within select Medicare-Severity Diagnosis Related Groups (MS-DRGs) who are referred to home health care after hospital stay, identified as those with a discharge destination of home health care on the hospital claim. We track the patients’ post-hospital health care utilization to see whether the patient actually started home health care within 7 days of being discharged from the hospital. We find that 29% of the study population had an “incomplete home health care referral”; that is, they did not receive home health care, even though the hospital claim indicated that the patient was discharged with home health care.
After documenting the prevalence of incomplete referrals to home health care, the study then compares beneficiaries with complete home health referrals to those with incomplete home health referrals. Our findings revealed racial/ethnic and socioeconomic disparities between patients with complete and incomplete home health referrals; patients with incomplete home health referrals were more likely to be non-white, dual eligible, from non-rural communities, and have higher prior utilization of health care and more comorbidities. Furthermore, patients with incomplete home health referrals had higher readmission rates, higher mortality rates, and lower total spending over the one-year period following hospitalization compared to patients with complete referrals.
The COVID-19 public health emergency accelerated the shift in post-acute care towards home health care as nursing facilities struggled with infection control. This growth in home health care after hospitalization is good for both patients and payers, if outcomes are no worse. It allows the patient to receive care at home, the preferred setting for treatment among older patients, and can lead to lower healthcare costs as it substitutes for institutional post-acute care. However, an increase in home health care referral after hospitalization may also exacerbate disparities in accessing care, an implication of the study findings. As patients are more frequently referred to home health care after hospitalization, non-white and dual eligible patients may be at greater risk of incomplete home health referrals. This can also lead to greater disparities in outcomes as the cost of the incomplete home health referrals to beneficiaries are higher readmission and mortality rates. Policymakers and researchers must consider reasons for incomplete home health referrals and design policies that ensure that Medicare beneficiaries who are referred to home health care after hospitalization actually receive the prescribed care.Services : Blog, Health Economics & Outcomes Research Expertise: Disparities, home health care
A growing share of Medicare beneficiaries are discharged to home health care to receive post-acute care at home after their acute care hospital stay. MedPAC reports that between 2012 and 2017, the percentage of hospitalized Medicare fee-for-service beneficiaries discharged to home health care increased from about 16% to 18%, and the two-percentage-point increase accounted for
The COVID-19 pandemic brought about a drastic downturn in hospital finances at a time when hospitals were called to play a frontline role in the fight against the pandemic. According to projections from the American Hospital Association, hospitals will lose $323 billion in 2020 due to COVID-19, with $202 billion of this loss taking place in the first four months of the national health emergency in the US (March through June). This financial downturn was driven by an unprecedented and abrupt reduction in the utilization of hospital services. As the fight against the coronavirus continues, much remains uncertain. Hospitals’ ability to navigate these uncertain times will depend, in part, on their success in anticipating and responding to future changes in the demand for hospital services.
Below we present a conceptual framework for understanding changes in inpatient hospital services as a result of the pandemic. Our framework suggests the following:
A Conceptual Framework for Forecasting the Effect of COVID-19 on Inpatient Hospital Volume
In examining the effect of COVID-19 on inpatient hospital utilization, it is important to consider how the pandemic affected the demand for inpatient hospital services. In forecasting utilization of hospital inpatient volume during COVID-19, we consider four components of hospital inpatient volume based on admission type.
Early evidence from select hospital systems shows that in April 2020 hospital admissions were down by up to 35% and surgeries down by up to 70% compared to April 2019. More recently, hospitals are reporting their volumes have climbed back up since the early days of the pandemic, getting closer to pre-COVID levels. A recent analysis of data from 201 hospitals in 36 states showed that all medical admissions declined by 34.1% in April and were still 8.3% below pre-COVID baseline by June/July. These fluctuations in total hospital volume mask substantial variation in volume by admission type. Below, we summarize recent evidence on how COVID-19 affected each admission type.
Hospitals’ pre-COVID mix of inpatient services is a key determinant of the impact of COVID-19 on hospital finances.
Since pre-COVID shares of admissions within each category vary across hospitals, the effect of reduced demand for hospital services due to the pandemic will also affect hospitals differently. Elective hospitalizations make up a relatively greater share of total hospitalizations in small hospitals (26.9%) as compared to larger hospitals (Medium: 14.4%; Large: 15.1%). We observe similar patterns for rural and for-profit hospitals, when compared against urban and not-for-profit hospitals, respectively. Hospitals that rely on a greater share of elective hospitalizations are more likely to be influenced by sharp fluctuations in elective surgeries that occurred earlier during the pandemic. Small, rural, and not-for-profit hospitals also have a larger share of hospitalizations that are non-ED and non-elective relative to other hospitals within its hospital characteristic group. As a result, these hospitals will have a larger impact from long-term shifts in outpatient care and telehealth services on their number of admissions.
Note: Row percentages may not sum to 100% due to rounding. Definition of small, medium, and large hospitals vary by region as indicated in NIS Description of Data Elements.
Future Impact of COVID-19 on Hospital Admissions
There is much uncertainty about how the pandemic will unfold and how hospitals will be impacted as a result in the coming months. Although our medical sector in general and hospitals in particular may be better prepared to weather any new storms related to the pandemic, the incoming flu season is expected to bring new challenges. Even if total hospital volume reaches pre-COVID levels, the distribution of hospitalizations across admission types is likely to change in the long run as a result of the pandemic. The impact on hospital finances will be partially dependent on what the new distribution of hospitalizations across admission types looks like.
Elective Admissions: If there is a jump in COVID-19 cases in the coming months, elective hospital admissions may fall sharply again, potentially due to state executive orders in areas that experience a surge in infections. The long-term impact of COVID-19 on elective admissions will partially depend on patients’ demand for ambulatory care. Furthermore, a recent report from the Commonwealth Fund shows that physician office visits and other ambulatory services have increased since the sharp declines in March and April but have leveled off 10 percent below their pre-COVID volume. This suggests that as hospitals clear the backlog of previously canceled surgeries, the number of elective admissions may also plateau at a lower level than the pre-COVID volume if patients continue to avoid receiving outpatient care in the coming months.
Non-Elective, Non-ED Admissions: The hospitalizations that fall in this category depend on ambulatory care, delivered in outpatient clinics and physician offices. If patients stop going to doctors’ offices for routine or other care, they will be less likely to have hospitalizations that can be scheduled ahead of time and more likely to end up in the ED with potentially more severe conditions. Delayed ambulatory care can reduce hospitalizations in this group and potentially even shift some of these hospitalizations to the admissions from ED.
Admissions from the ED: There will be both upward and downward pressures on admissions from ED in coming months. On one hand, the public’s anxiety over catching coronavirus in the hospital setting may keep ED visits and hospital admissions from ED low. In fact, the magnitude of the decline in ED visits in Spring 2020 coupled with the observation that ED use and hospitalizations fell for acute conditions, such as heart attack and stroke, suggested that part of the reduction in admission from ED was due to people avoiding ED use for conditions that require prompt medical care. On the other hand, heightened sensitivity about coronavirus may increase ED admissions as we head into a new flu season. Furthermore, reduction in routine ambulatory care and elective surgeries may put upward pressure on ED visits as patients delay care until the last minute. For example, many healthcare providers view the term “elective admissions” as misleading because hospitalizations in this category are needed, improve quality of life, and can become “non-elective” urgent hospitalizations if deferred for too long. In the coming months, overall ED use and hospital admissions from the ED will be determined largely by the public’s attitudes towards avoiding prompt medical care and heightened sensitivity towards flu-like symptoms.
COVID-19 has brought about sharp fluctuations in the volume of inpatient hospital admissions. Forecasting future changes in the demand for hospital services and associated changes in hospital finances will be important as we continue the fight against the pandemic. A full accounting of the impact of COVID-19 on hospital finances will require consideration of changes in volume due to the pandemic as well as the payments associated with admission type.
The COVID-19 pandemic brought about a drastic downturn in hospital finances at a time when hospitals were called to play a frontline role in the fight against the pandemic. According to projections from the American Hospital Association, hospitals will lose $323 billion in 2020 due to COVID-19, with $202 billion of this loss taking place
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
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.
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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,
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.
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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