The Medicare Payment Advisory Commission (MedPAC) on Friday debated how to change the payment method for chronically critically ill patients in acute care and long-term care hospitals so they are more accurate and based on patient needs.
Chronically critically ill (CCI) cases have significantly increased without payment adjustments, efficiencies or incentives for improvements, according to MedPAC researchers, who discussed different options at the commission meeting.
Chronically critically ill patients are considered those who have spent at least eight days in an ICU/CCU.
Medicare pays different rates for hospital services in acute care hospitals, whose payments are based on the inpatient prospective payment system (IPPS) with the addition of an outlier sum to offset potentially higher costs of the most critically ill, than it does for long-term care hospitals (LTCH), whose rates are based on inflationary costs, said Dana Kelley, MedPAC senior analyst.
The LTCH payment policies distort resource use and require at least 25 days length of stay, although there is a short-stay outlier policy, she said.
"In some markets, the LTCH supply may result in the admission of less complex patients who could be cared for in other less-costly settings. This is not difficult to do because there are almost no criteria for admission," she said. Some areas of the country have few or no LTCHs, yet many Medicare patients receive similar services in other lower-cost settings.
The concerns about payments for these patients center on the fact that Medicare makes different payments across settings for similar patients and payments don't match the resource needs of the patients across both settings, Kelley said.
"The financial systems of the two settings are misaligned and have a push-pull effect, which results in increased costs to the program," she said, including an incentive for unnecessary care transition between settings. Hospitals can unbundle care by transferring some costly patients to LTCHs, she said.
Instead, the program should be designed "to realign payments to be site-neutral and patient-centered," said MedPAC consultant Julian Pettengill. To accomplish this, Medicare would pay for all acute care hospital and LTCH cases using IPPS rates and modify the IPPS to better align payments and costs for chronically critically ill patients.
"Payments would reflect patients' characteristics rather than the setting of patient care," he said.
Under one option, LTCH could continue to treat CCI patients, but they would be paid under the same rates and policies of acute care hospitals treating similar patients. Restrictive features unique to the LTCH payment system, such as the 25-day average-stay requirement, would disappear, Pettengill said.
The result would be that acute care hospitals that serve CCI patients would receive higher payments, while LTCH payments would decline, but that would partially be offset by higher outlier payments.
Under another option, newly created CCI Medicare severity diagnosis related groups (MS-DRGs) with higher values would redistribute payments, he said. Acute care hospitals with many CCI patients would see higher payments. LTCHs that serve mostly CCI patients would see smaller declines in total payments than LTCHs that also serve non-chronically critically ill patients.
"However, if we offer higher rates for CCI cases, hospitals would face incentives at the margin to increase critical care use and to get the higher payment," Pettengill said.
Another option, which the researchers have yet to fully develop, is to have hospitals bundle the expected costs and be responsible for decisions and payments for LTCH and skilled nursing facilitiesy/nursing-allied-health" target="_blank" class="directory-item-link">nursing facilities care. A portion of the post-acute care payments could go toward outlier payments.