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VOLUME 51 | NUMBER 5 | OCTOBER 2016


The Relative Importance of Post-Acute Care and Readmissions for Post-Discharge Spending

Objective: To understand what patterns of health care use are associated with higher post-hospitalization spending.

Data Sources: Medicare hospital, skilled nursing, inpatient rehabilitation, and home health agency claims, and Medicare enrollment data from 2007 and 2008.

Study Design: For 10 common inpatient conditions, we calculated variation across hospitals in price-standardized and case mix–adjusted Medicare spending in the 30 days following hospital discharge. We estimated the fraction of spending differences between low- and high-spending hospitals attributable to readmissions versus post-acute care, and within post-acute care between inpatient rehabilitation facility (IRF) versus skilled nursing facility (SNF) use. For each service, we distinguished between differences in probability of use and spending conditional on use.

Data Extraction Methods: We identified index hospital claims and examined hospital and post-acute care occurring within a 30-day period following hospital discharge. For each Medicare Severity Diagnosis-Related Group (MS-DRG) at each hospital, we calculated average price-standardized Medicare payments for readmissions, SNFs, IRFs, and post-acute care overall (also including home health agencies and long-term care hospitals).

Principal Findings: There was extensive variation across hospitals in Medicare spending in the 30 days following hospital discharge. For example, the interquartile range across hospitals ranged from $1,245 for chronic obstructive pulmonary disease to over $4,000 for myocardial infarction MS-DRGs. The proportion of differences attributable to readmissions versus post-acute care differed across conditions. For myocardial infarction, 74 to 93 percent of the variation was due to readmissions. For hip and femur procedures and joint replacement, 72 to 92 percent of the variation was due to differences in post-acute care spending. There was also variation in the relative importance of the type of post-acute spending. For hip and femur procedures, joint replacement, and stroke, whether patients received IRF was the key driver of variation in post-acute care spending In contrast, for pneumonia and heart failure, whether patients received SNF care was the key driver of variation in post-acute spending.

Conclusions: Through initiatives such as bundled payment, hospitals are financially responsible for spending in the post-hospitalization period. The key driver of variation in post-hospitalization spending varied greatly across conditions. For some conditions, the key driver was having a readmission, for others it was whether patients receive any post-acute care, and for others the key driver was the type of post-acute care. These findings may help hospitals implement strategies to reduce post-discharge spending.

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