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"Hospitals Discharge Patients to Maximize Medicare Payments, Study Finds"

Dr. Jack Needleman, chair of FSPH Health Policy and Management, was interviewed by The Wall Street Journal about his research that found long-term-care facilities discharging patients at lucrative times.
Monday, June 8, 2015
hospital bedroom with two beds

Long-term-care hospitals discharge a disproportionately large share of Medicare patients during a window when they stand to make the most money from reimbursements under the federal program, according to a study in the journal Health Affairs.

The new study, which focuses on patients who were on ventilators, echoes findings in an analysis by The Wall Street Journal that broadly examined long-term-care hospital claims paid by Medicare and found the same pattern across all types of patients. In the new study, the researchers said their findings “confirm that…payment policy created a strong financial incentive for long-term-care hospitals to time patient discharges to maximize Medicare reimbursement.”

The findings are troubling, said Jack Needleman, one of the study’s authors and a professor at the University of California, Los Angeles’s Fielding School of Public Health.

“Those look like decisions that are not driven by patient need or what is in the best interest of the patient,” he said.

The pattern identified in the study is tied to Medicare’s payment structure for the nation’s approximately 400 long-term hospitals, which focus on treating patients who need intense care for a prolonged period and are reimbursed under different rules than general hospitals. The long-term hospitals typically receive smaller payments for what is considered a short stay, until a patient hits a threshold. After that threshold, payment jumps sharply, to a lump sum meant to cover the full course of long-term treatment. The threshold varies depending on the patient’s condition—for the ventilator patients examined in the new study, it was 29 days.

In the study, the researchers examined discharge patterns at all long-term hospitals not owned by the government that had claims paid by Medicare. They looked at claims paid during fiscal year 2002, before the current payment structure began to be phased in, and found that “lengths-of-stay were evenly distributed, with no noticeable spikes.”

But after the current policy went into full effect, between fiscal 2005 and 2010, the researchers found, “discharges swiftly became heavily concentrated on and immediately after the day of the” payment threshold, not including patients who died. The timing appeared to be “strongly influenced by financial incentives,” they concluded.

The researchers compared the observed discharge rates to estimated expected rates, which were based on assuming that for patients discharged within a week of the threshold, roughly half should leave before the threshold date and roughly half after it. They suggested that Medicare had spent $164 million in excess reimbursements on the ventilator patients over the five-year period.

Read the Full WSJ Article