Association for Public Policy Analysis & Management

Research Objective: Postacute care (PAC) offers important rehabilitation and recuperation services for Medicare beneficiaries after an acute care hospital stay, and its spending is one of the key drivers of regional variation in per capita fee-for-service (FFS) Medicare spending. The role of private plans in Medicare has become increasingly important since nearly one third of beneficiaries is now enrolled in Medicare Advantage (MA). Despite rapid growth in MA enrollment and the contemporaneous phenomenon of Medicare beneficiaries receiving postacute care, little is known about MA use and quality of post-acute services. Understanding how MA utilizes postacute services for its enrollees may provide insights on how capitated financials systems may incentivize care and if that incentive differs from fee-for-service models.

Study Design: The Healthcare Cost and Utilization Project includes the universe of all inpatient hospital discharges, including information on payer and discharger destination. I focused on Florida hospitals 2010-2014 for Medicare beneficiaries with an inpatient hospital stay who were either discharged to home or to a post-acute facility. I exclude observations from hospitals with less than ten inpatient stays by Medicare patients each year.

I examine both the length of stay and total cost of the inpatient (IP) hospital stay for all home and postacute discharges and for postacute only discharges. I also examine the odds of discharge home (versus to a postacute facility). I use a series of patient characteristics as controls and inverse probability weighting (IPW) models to test for differences in outcomes between FFS and MA hospitalized patients.

Principal Findings: 3,221,045 Medicare discharges to home or postacute facilities occurred in 2010-2014 in Florida. 31% of these discharges were covered by MA. FFS discharges were more likely to be female, older, and White. Additional clinical characteristics indicate that FFS discharges were not sicker as captured by the Charlson comorbidity index but were more likely to be frail than MA discharges. After controlling for age, sex, race, Charlson, and frailty status, regular linear and logistic regressions suggested that of all home and postacute discharges, MA discharges were more likely to be discharged home (OR=1.3, p<0.01) and had shorter IP lengths of stay (-0.3 days, p<0.01). Of postacute discharges, MA discharges had greater IP costs ($555, p<0.01) but not differences in IP lengths of stay. Using IPW models, I find that MA discharges were more likely to be discharged home, although at smaller odds (OR= 1.1, p<0.01), had shorter IP lengths of stay (-0.6 days, p<0.01), and slightly lower IP costs ($98, p<0.01). Of postacute discharges, MA discharges had shorter IP lengths of stay (-0.5 days, p<0.01) but greater IP costs ($578, p<0.01)

Conclusion: Adjusting for frailty and other functional status may be important in capturing utilization differences between MA and FFS hospitalized beneficiaries. Among postacute discharges, MA discharges incur more IP costs which may signal further different patient composition not captured by current risk adjustment. Further research is needed to evaluate the efficiency of the MA program on postacute service delivery compared to that of the FFS program.