Geography Affects the Availability of Post-Acute Care

The number of Medicare beneficiaries released to post-acute care after an inpatient acute hospital stay was significantly influenced by geographic location and episode definitions, according to a CMS report. CMS found that 38.7 percent of Medicare inpatient acute hospital stays was discharged to a post-acute care setting. The report is a preliminary step in considering different alternatives for bundled payments in the future.


Medicare services are often provided following inpatient acute hospital stays. Providers of Medicare post-acute care (PAC) services include long-term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs) and home health agencies (HHAs). Despite the implementation of prospective payment systems (PPSs)for each of the provider types, which were intended to control the costs of care, the total payments for Medicare PAC provider fee-for-service (FFS) payments increased from $26.6 billion to $63.5 billion from 2001 to 2011. As an alternative delivery system reform model, CMS is considering a system under which the costs of each episode of care, or specified set of services, are bundled into one payment.

The Center for Medicare & Medicaid Innovation (CMMI) launched the Bundled Payment for Care Improvement Initiative in 2011, the first model of which focused on the Medicare services provided during inpatient hospital stays and/or post-discharge periods. This study was funded by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) to provide in-depth information to be utilized in the larger policy discussion of Medicare PAC episodes and bundled payments. The study was conducted to provide an overview of a beneficiary’s trajectory of Medicare PAC use, as well as the services that are included or excluded under numerous acute hospital plus PAC use definitions.


According to the analysis, results varied depending on: (1) what was used to calculate average payment levels; (2) the mix and amount of PAC services; and (3) the definition of an episode end point.

Across the board, 38.7 percent of Medicare patients were discharged to a PAC setting. Among the top five Medicare Severity Diagnosis Related Groups (MS-DRGs), 94.2 percent of beneficiaries who had major joint replacement of a lower extremity without MCC were discharged to PAC; 95.4 percent of beneficiaries who underwent hip and femur procedures except major joint with CC were discharged to PAC; and 75 percent of 65 Intracranial hemorrhage or cerebral infarction with CC beneficiaries were discharged to PAC.

The “30 day fixed period following hospital discharge (prorated) excluding acute hospital readmissions and subsequent PAC services” definition was found to be the most restrictive of the five definitions, since it was a prorated approach, excluded acute readmissions, and excluded subsequent PAC. Consequently, the mean PAC payment per PAC user was only $5,745, and the average PAC episode length was only 22.7 days. However, the “any claim starting within 30 days of discharge” definition had a mean PAC payment per PAC user of $10,651, and an average PAC episode length of 40.6 days.

Among claims that started within 30 days of discharge: 52.2 percent of PAC episodes had at least one HHA claim; 45.3 percent of PAC episodes had at least one SNF claim; 9 percent of PAC episodes had at least one IRF claim; and 2 percent of PAC episodes had at least one LTCH claim.

The number of beneficiaries discharged to PAC varied by state, with Massachusetts showing 50.5 percent of beneficiaries discharged to PAC, and Montana showing only 31.9 percent. The study’s authors suggest that the supply of PAC providers and practice patterns may vary by geographic location.