The final evaluation report on the National Home Health Prospective Payment Demonstration : agencies reduce visits while preserving quality

45 Pages·2001·1.7 MB·English

by  Cheh, Valerie

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ContractNo.: 500-94-0062 MATHEMATICA
MPRReferenceNo.: 8246-127
PolicyResearch,Inc,
TheFinalEvaluation
ReportontheNational
HomeHealthProspective
PaymentDemonstration:
AgenciesReduceVisits
WhilePreservingQuality
April30,2001
ValerieCheh
Submittedto: Submittedby:
HealthCareFinancingAdministration MathematicaPolicyResearch,Inc.
7500SecurityBlvd,(C-3-21-06) P.O.Box2393
Baltimore,MD 21244-1850 Princeton,NJ 08543-2393
[phone]
ProjectOfficer: ProjectDirector:
AnnMeadow ValerieCheh
..
CONTENTS
Chapter Page
I THEDEMONSTRATION 1
A. POLICYCONTEXT 1
B. STRUCTUREOFTHEPHASEIIDEMONSTRATION 2
1 HowthePaymentSystemWorks 4
2. MonitoringtheQuaHtyofCare 6
3. DemonstrationParticipantsVersusAgenciesNationwide 6
C. ANALYTICMETHODSANDDATA 9
1 AnalyticMethods 9
2. Data 10
II HOWDIDPROSPECTIVEPAYMENTAFFECTTHEUSEOF
SERVICES? 12
III HOWDIDTHEDECLINEINSERVICEUSEAFFECTPATIENTS? 17
A. WHATHAPPENEDTOTHEQUALITYOFCARE? 17
B. DIDPROSPECTIVEPAYMENTAFFECTTHEUSEOF
OTHERSERVICES? 21
IV WERETHERESULTSCONSISTENTFORDIFFERENTTYPES
OFAGENCIESANDPATIENTS? 26
A. AGENCYSUBGROUPS 26
B. PATIENTSUBGROUPS 28
V HOWDIDPROSPECTIVEPAYMENTAFFECTAGENCYFINANCES? ..30
A. AGENCYPROFITSANDCOSTS 30
B. MEDICAREREVENUES 34
n
VI DISCUSSION 35
A. LIMITATIONS 35
B. POLICYIMPLICATIONS 36
REFERENCES 38
HI
TABLES
Table Page
1.1 CHARACTERISTICSOFDEMONSTRATIONPARTICIPANTSAND
ALLOTHERELIGIBLENONPARTICIPANTSNATIONWIDE 8
1.2 EVALUATIONISSUESANDANALYSISLEVEL 9
111.1 SUMMARYOFQUALITY-OF-CAREMEASURES 18
111.2 SELECTEDIMPACTSONTHEUSEOFMEDICARESERVICES 22
V.l SELECTEDIMPACTSONAGENCYFINANCIALMEASURES 32
IV
FIGURES
Figure Page
I.l POLICYCONTEXT 3
n.1 AVERAGEVISITSPERPATIENTINTHEYEARAFTER
ADMISSION,BYTREATMENTANDCONTROLSTATUS 14
V.1 PROSPECTIVELYPAIDAGENCIES'MEDICAREPROFIT
RATESASAPERCENTAGEOFTOTALMEDICAREVISIT
REVENUES,YEAR1ANDYEAR3 31
THEDEMONSTRATION
I.
A. POLICYCONTEXT
TheNationalHomeHealthProspectivePaymentDemonstrationwasdesignedtotestwhether
analternativepaymentsystemcouldreducepublicexpendituresbypromotingefficiencyinthe
deliveryofhomehealthcare. Thefirstphaseofthedemonstration,whichranfi^om1990to1993,
testedtheeffectsofapredeterminedper-visitpaymentratefortheMedicareprogram. Theresults
fromthatdemonstrationshowedthat,toachievesubstantialcostsavings,thepaymentsystemfor
homehealthhadtoprovideincentivestoreducethevolumeofservices(Phillipsetal.1994). Phase
IIofthedemonstration,whichranfrom1995to1998,testedtheeffectsofapredeterminedper-
episodepaymentrate. Thisreportdiscussesthefindingsfi-omPhaseII.
TheMedicarehomehealthbenefitgrewatadramaticratebetween1987and1995. Medicare
paymentsforhomehealthcarerosefi^om$2.4billionin1989to$16.8billionin1997,morethan
triplingtheshareoftotalMedicarespendingonhomehealth{HealthCareFinancingReview1998).
Nearlyallthisgrowthwasduetoanincreaseintheprovisionofservices,whichcoincidedwitha
dramaticexpansioninindustrysize. Between1989and1997,thenumberofhomehealthusers
annuallyper1,000beneficiariesrosefi-om51to109,andtheaveragenumberofvisitsperuserper
yearrosefrom27to73{HealthCareFinancingReview1998;andU.S.GeneralAccountingOffice
2000).' Coincidingwiththisgrowth,thenumberofMedicare-certifiedhomehealthagenciesrose
from5,700tomorethan10,000(U.S.GeneralAccountingOffice1998).
Congresshadbeenconcernedaboutthegrowthinhomehealthexpendituresbeforethisperiod.
However,thedramaticincreaseintheMedicarehomehealthbenefit,combinedwithmarked
'ThesefiguresreferonlytoMedicarebeneficiariesinfee-for-service.
1
regionalvariationsinserviceuseandrecentinvestigationsintoindustryfraudandabuse,prompted
CongresstolegislatechangestothebenefitaspartoftheBalancedBudgetActof1997(BBA97).
Changesincludedreducingtheper-visitcostlimits,eliminatingcoverageforpatientswhoseonly
skilledservicewasvenipuncture,andredefining"parttime"and"intermittent"care. Thebiggest
changewasthat,forthefirsttime.Congresslimitedtheper-beneficiaryexpenditureonhomehealth
servicesforwhichMedicarewouldpay. BBA97definedthemaximumpaymentforanagencyby
usinganewalgorithm,commonlyreferredtoastheInterimPaymentSystem(IPS).^
MedicarehomehealthservicesdecreaseddramaticallyinresponsetotheBBA97changes. As
Figure1.1shows,theaverageannualnumberofvisitsperhomehealthuserfell43percentfrom1997
to1999. Thenumberofhomehealthagenciesfell25percentduringthesameperiod(Officeof
EvaluationandInspections2000). Thus,PhaseIIofthedemonstrationtookplaceduringatimeof
unprecedenteddeclineintheuseofMedicarehomehealthservices.
B. STRUCTUREOFTHEPHASEIIDEMONSTRATION
Ninety-oneMedicare-certifiedhomehealthagenciesinfivestates—California,Florida,Illinois,
Massachusetts,andTexas—enrolledinthethree-year(PhaseII)per-episodedemonstration. Forty-
sevenwererandomlyassignedtothetreatmentgroupandreceivedper-episodepayment. The
remaining44wereassignedtotheconfrolgroupandcontinuedtooperateundercostreimbursement.
One control agency subsequently transferred into the treatment group nearthe start ofthe
demonstration,leadingtoarevisedtotalof48treatmentagenciesand43controlagencies.-' Each
^ThistermreferstothefactthattheIPSlastedonlyuntilthemandatedprospectivepayment
systemwasimplemented,inOctober2000.
^Theswitchwasmadeattherequestofanagencythathadestablishedanetworkwithtwoother
agenciesassignedtothetreatmentgroup. Thethreeagenciesplannedtomergefullyattheendof
thedemonstration.
FIGURE
1.1
POLICYCONTEXT
Demonstration
BBA97and IPS
Starts
80
60
Number of
Visits per
40 -
Home Health
U)
User
20 -
1989 1991 1993 1995 1997 1999
Source: Health Care Financing Administration (1999).
ORT= Operation Restore Trust.
agencyenteredthedemonstrationandbeganimplementingprospectivepaymentatthestartofits
fiscalyear. ThefirstentrantstothedemonstrationbeganimplementingprospectivepaymentinJune
1995;thelatestentrantsbeganinJanuary1996. Demonstrationoperationswereplannedtocontinue
throughDecember1998. (Thedemonstrationwasextendedfortreatmentgroupagenciesuntil
MedicareprospectivepaymentwasimplementednationallyinOctober2000.)
1. HowthePaymentSystemWorks
Agenciesselectedforthetreatmentgroupreceivedalump-sumpaymentforthefirst120days
ofhomehealthcare,regardlessofthenumberorcostofvisitsprovided.'* Theagencieswerethus
"atrisk"forthecostsofcareincurredduringthisperiod. Onlyafterthe120-dayat-riskperiodand
asubsequent45-daygapinserviceshadelapsedcouldanagencyreceiveanewper-episodepayment
foragivenMedicarebeneficiary. Foreachvisitbeyond120daysthatdidnotbeginanewepisode
(referredtoasthe"outUerperiod"),treatmentagenciesreceivedafixedpaymentratethatvariedby
thetypeofvisit. Atreatmentagencyalsowaspaidonaper-visitbasisforvisitstopatientsadmitted
beforetheagencybegandemonstrationoperations("phase-in"visits),andtopatientsadmittedwithin
120daysoftheendofdemonstrationoperationsinthatagency("phase-out"visits).
Agenciesselectedforthecontrolgroupreceivedpaymentsbasedonthecost-basedsystemin
placeatthestartofthedemonstration. Specifically,controlagencieswerereimbursedfortheir
actualper-visitcosts,upto112percentofthemeancostincurredbyallagencies(fortheagency's
mixofvisits)inthesamegeographicarea.
''Durablemedicalequipment,nonroutinemedicalsupplies,andPartBambulatoryhomehealth
servicescontinuedtobereimbursedatcostthroughoutthedemonstration, hiaddition,ifanagency
didnotprovideoneormoreofthesixMedicareservices(skillednursing;physical,occupational,
andspeechtherapy;homehealthaides;andmedicalsocialworker)duringthebaseyearbutbegan
todo soduringthedemonstration,thenthosevisitsalsowerereimbursedatcostduringthe
demonstration,aswerethecostsofcareforwhichMedicarewasasecondarypayer.
Prospective(per-episode)ratesfortheat-riskperiodwerebasedonatreatmentagency'scosts
andepisodeprofileinthefiscalyearprecedingitsentryintothedemonstration(thebaseyear),
adjustedforinflationandchangesincasemixineachevaluationyear.^ Theepisodeprofilewasthe
averagenumberofvisitsprovidedbytheagencyduringthe120-dayperiod,calculatedforeachof
thesixtypesofvisitscoveredbyMedicare.Paymentsforoutlier,phase-in,andphase-outvisitswere
alsobasedontheagency'sbase-yearper-visitcosts(adjustedforinflation).^HCFA'smarketbasket
wasusedtoadjustboththeper-visitratesandper-episoderatesforinflation. Bothratesweresubject
toHCFA'sstatutoryhomehealthcostlimits.
Thecase-mixadjusterclassifiedeachpatientinto1of18groupsonthebasisof12variablesthat
describedthepatient'spreadmissioncharacteristicsandhospitalstayhistory.Fromthisinformation,
anaggregate case-mix indexwas created foreach agency. Atthe endofeachyearofthe
demonstration,anagency'scase-mixindexforthatyearwascomparedwithitscase-mixindexfor
thebasequarter(thelastquarterofthebaseyear). Iftheagency'scasemixdifferedfi'omitsbase-
quartercasemix,thenitsaggregatepaymentwasretrospectivelyadjusted.
HCFAprovidedaloss-sharingarrangementtoencourageparticipationinthedemonstration.
Itreimbursedtreatmentagenciesfor99percentoflossesoccurringduringthefirstdemonstration
year,andfor98percentand97percentoflossesduringthesecondandthirddemonstrationyears,
respectively,aslongastotalpaymentsremainedwithinthedemonstrationcostlimits.
Thekeyincentiveunderthispaymentsystemwasthatagenciescouldearnprofits,whichthey
couldnotdoundercostreimbursement. Agenciescouldcamprofitsintwoways. Theycouldlower
^Formoreinformationonpaymentratesunderthedemonstration,seePhillipsetal.(1995).
^Becausecompletedataforepisodeprofilesandsettledcostreportswerenotavailablefora
givenyearimtilsomemonthsafterthatyearhadended,theinitiallump-sumandper-visitratesused
inthedemonstrationwerepreliminaryandwererevisedafterfinalbase-yeardatabecameavailable.