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The American Journal of Managed Care July 2019
Changing Demographics Among Populations Prescribed HCV Treatment, 2013-2017
Naoky Tsai, MD; Bruce Bacon, MD; Michael Curry, MD; Steven L. Flamm, MD; Scott Milligan, PhD; Nicole Wick, AS; Zobair Younossi, MD; and Nezam Afdhal, MD
Precision Medicines Need Precision Patient Assistance Programs
A. Mark Fendrick, MD; and Jason D. Buxbaum, MHSA
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Robert W. Dubois, MD, PhD
Real-Time Video Detection of Falls in Dementia Care Facility and Reduced Emergency Care
Glen L. Xiong, MD; Eleonore Bayen, MD, PhD; Shirley Nickels, BS; Raghav Subramaniam, MS, BS; Pulkit Agrawal, PhD; Julien Jacquemot, MSc, BSc; Alexandre M. Bayen, PhD; Bruce Miller, MD; and George Netscher, MS, BS
Impact of a Co-pay Accumulator Adjustment Program on Specialty Drug Adherence
Bruce W. Sherman, MD; Andrew J. Epstein, PhD; Brian Meissner, PharmD, PhD; and Manish Mittal, PhD
Heroin and Healthcare: Patient Characteristics and Healthcare Prior to Overdose
Michele K. Bohm, MPH; Lindsey Bridwell, MPH; Jon E. Zibbell, PhD; and Kun Zhang, PhD
Currently Reading
Medicare’s Bundled Payment Model Did Not Change Skilled Nursing Facility Discharge Patterns
Jane M. Zhu, MD, MPP; Amol Navathe, MD, PhD; Yihao Yuan, MSc; Sarah Dykstra, BA; and Rachel M. Werner, MD, PhD
Insurers’ Perspectives on MA Value-Based Insurance Design Model
Dmitry Khodyakov, PhD; Christine Buttorff, PhD; Kathryn Bouskill, PhD; Courtney Armstrong, MPH; Sai Ma, PhD; Erin Audrey Taylor, PhD; and Christine Eibner, PhD
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James Davis, PhD; Eunjung Lim, PhD; Deborah A. Taira, ScD; and John Chen, PhD
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Sunita M. Desai, PhD; Laura A. Hatfield, PhD; Andrew L. Hicks, MS; Michael E. Chernew, PhD; Ateev Mehrotra, MD, MPH; and Anna D. Sinaiko, PhD, MPP
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Natasha Parekh, MD, MS; Sheryl Savage; Amy Helwig, MD, MS; Patrick Alger, BS; Ilinca D. Metes, BS; Sandra McAnallen, MA, BSN; and William H. Shrank, MD, MSHS
Evaluation of Interdisciplinary Geriatric Transitions of Care on Readmission Rates
Nada M. Farhat, PharmD; Sarah E. Vordenberg, PharmD, MPH; Vincent D. Marshall, MS; Theodore T. Suh, MD, PhD, MHS; and Tami L. Remington, PharmD

Medicare’s Bundled Payment Model Did Not Change Skilled Nursing Facility Discharge Patterns

Jane M. Zhu, MD, MPP; Amol Navathe, MD, PhD; Yihao Yuan, MSc; Sarah Dykstra, BA; and Rachel M. Werner, MD, PhD
Hospital participation in Medicare’s Bundled Payments for Care Improvement model was not associated with changes in number of skilled nursing facility (SNF) partners or in SNF discharge concentration.

Objectives: To evaluate whether participation in Medicare’s voluntary Bundled Payments for Care Improvement (BPCI) model was associated with changes in discharge referral patterns to skilled nursing facilities (SNFs), specifically number of SNF partners and discharge concentration.

Study Design: Retrospective observational study using difference-in-differences analysis.

Methods: We used Medicare claims data from 2010 to 2015 to identify admissions for lower joint replacement surgery and the following medical conditions: congestive heart failure, renal failure, sepsis, pneumonia, urinary tract and kidney infections, chronic obstructive pulmonary disease, and stroke. We used difference-in-differences analyses to assess changes in discharge patterns among BPCI-participating hospitals compared with matched control hospitals.

Results: Our analytic sample included 3078 acute care hospitals and 14,866 Medicare-certified SNFs in the United States, encompassing more than 47 million hospital discharges. Of these hospitals, 416 participated in BPCI, with the majority selecting into joint replacement episodes (n = 295). BPCI participation was not associated with any change in number of SNF partners (increase by 0.8 SNFs among BPCI hospitals relative to non-BPCI hospitals; 95% CI, –0.2 to 1.9; P = .11) or in discharge concentration (increase in Herfindahl-Hirschman Index of 0.2 among BPCI hospitals relative to non-BPCI hospitals; 95% CI, –68.7 to 69.1; P = .36). Results did not vary across clinical conditions and were robust across duration of BPCI participation and with different comparison groups.

Conclusions: Hospital participation in BPCI was not associated with changes in the number of SNF partners or in discharge concentration relative to non-BPCI hospitals. More research is needed to understand how hospitals are responding to bundled payment incentives and specific practices that contribute to improvements in cost and quality.

Am J Manag Care. 2019;25(7):329-334
Takeaway Points

Hospitals participating in Medicare’s Bundled Payments for Care Improvement model did not concentrate skilled nursing discharges among smaller groups of skilled nursing facilities (SNFs).
  • Under bundled payment, hospitals bear financial responsibility for SNF care but may perceive themselves as constrained in their ability to direct patients to specific providers, which may limit shifts in referral patterns.
  • Hospitals may respond to bundled payment in ways that do not affect discharge flows, such as sharing electronic health records, monitoring SNF performance, and hiring care coordinators to track patients after discharge.
  • Further research is needed to assess specific hospital responses to bundled payment and their impacts on cost and quality.
In 2013, CMS implemented the Bundled Payments for Care Improvement (BPCI) program. In this voluntary bundled payment arrangement, participating hospitals select from 48 clinical episodes, including the inpatient stay plus all related services up to 30, 60, or 90 days after hospital discharge.1 Medicare continues to make fee-for-service payments, but total expenditures are later reconciled against a target price for an episode of care. By linking payments for services across settings, BPCI shifts the financial responsibility of postdischarge care to hospitals and incentivizes coordination between hospitals and postacute care providers, including skilled nursing facilities (SNFs).2

As a primary driver of cost growth and variation in Medicare spending,3 postacute care constitutes a specific target for programs like BPCI.4 In 2015, approximately 20% of all Medicare fee-for-service hospital admissions ended in postacute care in a SNF, accounting for 1.7 million beneficiaries annually.5 Care fragmentation likely contributes to these cost and utilization burdens; on average, each hospital currently works with nearly 40 SNFs, the majority of which account for 1% or less of total referrals each.6 Moreover, national estimates suggest that connections between hospitals and SNFs have weakened over recent years.7

In this context, a potential response to bundled payment incentives is that hospitals may more carefully select where they refer patients after discharge in an effort to concentrate discharges and improve care coordination with those SNFs. Research has demonstrated that tighter relationships between hospitals and SNFs may be associated with reductions in readmission rates,8-10 hospital length of stay,11,12 and total costs of care,13 each of which are goals for bundled payment. Emerging evidence suggests that some hospitals have begun concentrating their discharge referrals and care management efforts to a smaller group of postdischarge facilities,14,15 including as a response to participation in bundled payment models.

Whether bundled payment indeed encourages hospitals to concentrate their discharges to a smaller group of SNFs is an area of growing interest. Understanding hospital responses to payment initiatives may help health systems and policy makers to both guide bundled payment design and policy adjustments and optimize outcomes for those patients receiving SNF care. Our objective was to evaluate the association of voluntary BPCI participation with changes in referral patterns to SNFs, using nonparticipating hospitals as matched controls and focusing on 2 measures of hospital–SNF integration: (1) the number of SNF partners per hospital and (2) the extent to which hospitals concentrate their discharges to SNFs.


Data and Study Sample

Using the Medicare Provider of Service file, we identified US acute care hospitals and Medicare-certified SNFs from 2010 to 2015. We excluded new hospitals and SNFs that entered the market after 2010, hospitals outside the 50 states and the District of Columbia, and critical access hospitals. We linked this facility-level file to the 100% Medicare Provider Analysis and Review files and the Medicare Beneficiary Summary File to identify all Medicare beneficiaries who were admitted to a US acute care hospital and had a SNF claim within 3 days of discharge between January 1, 2010, and December 31, 2015.

We flagged beneficiaries hospitalized for lower joint replacement surgery using Medicare Severity–Diagnosis Related Groups (MS-DRGs) 469 or 470 for major hip or knee replacement or reattachment of the lower extremity with or without a major complicating or comorbid condition, respectively. We also identified beneficiaries who were hospitalized for a variety of medical conditions, including congestive heart failure (MS-DRGs 291-293), renal failure (MS-DRGs 682-684), sepsis (MS-DRGs 870-872), simple pneumonia and respiratory infections (MS-DRGs 177-179, 193-195), urinary tract and kidney infections (MS-DRGs 689-690), chronic obstructive pulmonary disease (MS-DRGs 190-192, 202-203), and stroke (MS-DRGs 61-66). These diagnosis groups account for the most common diagnoses that end in SNF stays after hospitalization, and they correspond to clinical episodes from which BPCI participants are able to choose.

Our sample was restricted to hospitals with at least 5 total discharges per half-year and to hospitals and SNFs within the same market with at least 1 discharge connection between them per half-year. Markets were defined using Dartmouth Atlas’ hospital referral regions (HRRs), representing healthcare markets for tertiary medical care. Patients discharged to a SNF outside the hospital’s HRR were not included in our analyses because they do not reflect typical patterns of care and represent a small fraction of all hospital–SNF discharges. Beneficiaries were included if they were enrolled in Medicare parts A and B, Medicare was not their secondary payer, and they were discharged alive from the hospital.

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