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Evaluating potential proxies for patient functional status in a unified post-acute care payment system for Medicare
Evaluating potential proxies for patient functional status in a unified post-acute care payment system for Medicare
- Collection:
- Health Policy and Services Research
- Author(s):
- Garrett, Bowen, author
Wissoker, Douglas A., author
Skopec, Laura, author - Contributor(s):
- Health Policy Center (Urban Institute), issuing body.
Medicare Payment Advisory Commission (U.S.), issuing body. - Publication:
- Washington, DC : Urban Institute, June 2023
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Health Equity -- economics
Health Policy
Medicare -- economics
Subacute Care -- economics
United States - Genre(s):
- Technical Report
- Abstract:
- The Improving Medicare Post-Acute Care Transformation Act of 2014, or IMPACT Act, required the Medicare Payment Advisory Commission (MedPAC) to recommend design features for a unified prospective payment system (PPS) for post-acute care (PAC). In response, MedPAC issued a report on the design (MedPAC 2016) and has issued subsequent reports on implementation issues (MedPAC 2017) and other possible considerations for a unified PAC PPS. The risk models of MedPAC's demonstration PAC PPS, described below, adjust for patient age, diagnoses (reason for treatment), and comorbidities but avoid including direct measures of a patient’s functional status because of concerns about the quality of the function data PAC providers collect. Until recently, each PAC setting collected measures of patient function that were not similarly defined or directly comparable across settings. The IMPACT Act also required the four PAC settings- skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs)—to collect and report consistent measures of patient function. But even with consistency in how the measures are defined, concerns about the misreporting of function remain. In its June 2019 report, MedPAC described the ways in which PAC providers' assessments of patient function could be responsive to payment incentives and provided evidence suggesting there is substantial miscoding of patient functional status that is typically in ways that would boost provider payments or improve performance measures (MedPAC 2019). The current version of MedPAC's PAC PPS model intentionally excludes functional status as a risk adjustment factor in its payment model, but this results in payment-to-cost (P/C) ratios that are substantially higher for high-functioning patients. This is because the model without functional status leads to predicted costs substantially below actual costs for low-functioning patients and substantially above costs for high-functioning patients. If functional status is well measured and patient costliness varies with functional status after adjusting for age and diagnoses, not adjusting payments for functional status could lead providers to avoid predictably more costly patients, who would be relatively unprofitable. However, if functional status is subject to systematic misreporting or gaming, observed functional status would not reflect a patient's true expected cost, and payment weights for functional status would be distorted. Such distortions would persist even if the payment weights were periodically updated. Providers that systematically misreport patients' functional status could profit unfairly at the expense of providers that do not. That P/C ratios vary by measured functional status does not, by itself, imply that misreported measures should be included in or excluded from a unified PAC PPS. However, there is not a clear solution. Excluding functional status from the risk adjustment would result in over- and underpayments for some patients, which could encourage providers to selectively admit certain types of patients. Including functional status in the risk adjustment would encourage providers to misreport the information if it raised payments without incurring higher costs. Such behavioral responses would require regular recalibration of the payment weights and the level of payments to keep payments aligned with the costs of care. In this report, we consider whether it is possible to find variables with available administrative data that may serve as proxies for functional status in a unified PAC PPS.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-DC license. (More information)
- Extent:
- 1 online resource (1 PDF file (43 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 9918697485706676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918697485706676