Becker's Hospital Review

24 Executive Briefing: Bundled Payments • Correspondingly, the 10 most expensive regions did not utilize any institutional post-acute care for about 30 percent of their CHF episodes. • The readmission rate for CHF is 40 percent in the lowest-cost regions and 51 percent in the highest-cost regions. • For pneumonia, payment differences are due primarily to readmission, skilled nursing facility and long-term cost hospital post-acute stays. The Medicare program paid an average of $20,750 for pneumonia care in the 10 most expensive regions and an average of $15,280 in the 10 least expensive regions, a difference of 36 percent. • For major joint replacements (hips and knees), the prin- cipal driver for payment differentials was post-acute rehabilitation utilization. The DataGen research team ex- pected to find less payment variation between regions for the major joint episodes based on the assumption that care patterns for a surgical procedure are more clearly defined than for medical conditions. However, the findings showed a difference of 27 percent between the average episode pay- ment in the most expensive and least expensive regions — about $28,290 per episode vs. $22,290. The predominant cause of this variation was among the post-acute rehabilita- tion settings — inpatient rehabilitation facility, SNF and home health care — with the 10 most expensive regions reporting significantly higher costs in all three rehabilitation settings. Perhaps the most dramatic finding — with potential implications for care redesign and bundled payments — was among the AMI epi- sodes. While much of the variation in patient-centered episodes of care for CHF, pneumonia, and major joint replacements is driven by readmissions and post-acute care utilization, the DataGen analysis shows a major driver of the variation in payments for AMI DRG episodes is the volume of direct transfers from the initial hospital to another acute-care hospital. In the highest-cost regions, about half of all the acute-care transfers for AMI patients were for percutane- ous coronary intervention, also known as angioplasty, and possible stent placement. The AMI episode conundrum A patient who experiences a heart attack (AMI) and is admitted to the hospital may be assigned to one of several DRGs depending upon the care that person receives during his or her inpatient stay. In the instance where a patient is diagnosed with an AMI and then requires a PCI, the patient will be either: 1. Admitted to the hospital with an AMI and receive the PCI procedure at that hospital. In this case, the first and only DRG assignment will be PCI, not AMI; or 2. Admitted to the hospital with an AMI, and then transferred to another hospital for the PCI. This results in two DRG as- signments: one for the AMI treated at the first hospital and one for the PCI performed at the second, transfer hospital. When reviewing only those episodes of care that began with a DRG assignment of AMI, of the more than 41,000 qualifying Medi- care episodes across the country in 2012, 14 percent were trans- ferred to another acute-care facility and 5 percent had a PCI at the transfer hospital. Nationally, Medicare payments (i.e., costs to the program) for AMI acute-care transfers (not just those receiv- ing PCI) were second only to the costs for patients going to long- term care (Figure 1). Figure 1 shows the average cost of care for episodes stratified by the first institutional setting that a patient goes to after discharge. The costs to the Medicare program for all settings both before and after the first institutional setting are represented by different colors. Figure 1 also shows the percent- age of episodes in each category of the first institutional setting. Payments reflect actual payments excluding IME, DSH, and Capital, are neutralized for wage adjustments, are prorated, exclude unrelated services and readmissions, and are not trimmed for episode outliers. Data Source: 2011, 2012 100% Medicare Standard Analytic Files First Institutional Post-Anchor Setting Detail - AMI DRG 90-Day Episodes, 2012 Data for the US Acute Transfer 14% HHA 17% Inpatient Psych 0% Inpatient Rehab 1% LTCH 0% Readmission 15% Self-Care 38% SNF 15% Distribution of Episode Count by First Setting $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 Acute Transfer HHA Inpatient Psych Inpatient Rehab LTCH Readmission Self-Care SNF Title Episode First Post-Anchor Setting Average Payments per Setting by First Post-Anchor Setting Anchor Admission Acute Transfer Readmission Inpatient Rehab HHA Outpatient Professional SNF IP Psych LTCH Figure 1 HHA = home health agency • IP Psych = inpatient psychiatric • LTCH = long-term care hospital For major joint replacements (hips and knees), the principal driver for payment differentials was post- acute rehabilitation utilization.

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