Poster #34 - Effects of Provider Payment Reductions on Skilled Nursing Facility Utilization and Patient Outcomes

• In Event: Friday Poster Reception

Abstract

We examine how Medicare provider payment reductions affect patients’ health care utilization and outcomes in the skilled nursing facility (SNF) setting. SNF care is used by one in five Medicare beneficiaries after a hospitalization, and is often targeted by Medicare cost-savings initiatives. Because of selective participation, it is often unclear how payment reforms or reductions affect SNF utilization levels and patient outcomes. We address this by exploiting a natural experiment that reduced SNF cost-sharing revenues in select states due to a conflict between Medicare and Medicaid policies. Cost-sharing is substantial for SNF care; after 20 days of care patients assume responsibly for $200 daily co-pays, and most use SNF services for 30 to 40 days. Medicaid is responsible for cost-sharing payments for dual Medicare-Medicaid enrollees, but in 43 states ‘lesser-of’ rules allow states to forgo cost-sharing payments when Medicare reimbursement surpasses Medicaid rates. As a result, SNFs subject to lesser-of policies accrue ‘bad debt’ from uncompensated co-insurances when providing post-acute care to dual enrollees. Medicare has historically reimbursed SNFs, ex-post, for 100% of bad debts attributable to Medicaid. However, after the passage of the 2012 Middle Class Tax Relief and Job Creation Act (P.L. 112-96), the percentage of bad debt that could be reimbursed was gradually reduced by about 12% per year between 2013 and 2015, capping at 65%. Importantly, while this provision of P.L. 112-96 was applicable to all states, it effectively applied only to states with lesser-of rules and not states that fully reimburse Medicare co-insurances (‘full payment’ rule states) where little bad debt is accumulated. We leverage this difference in policy application to study the impact of reduced SNF reimbursement on utilization and health outcomes of dual enrollees. Our sample includes 3.4 million Traditional Medicare discharges to SNFs for common conditions (e.g. heart failure, pneumonia, hip fracture, COPD) between 2008 and 2018. We focus on the probability of discharge before 21 days, when cost-sharing begins, as well as short-term readmission and mortality. Our dynamic difference-in-difference estimates show that before 21-day discharge rates were declining in both types of states in the years before Medicare began reducing bad debt reimbursements. Beginning in 2015, after bad debt reimbursement reached its lowest, the probability of discharge before 21 days began increasing in lesser-of states (30.7% in 2015 vs 30.0% in 2012 pre-policy) and continued to trend downward in full payment states (28.4% in 2015 vs 29.7% in 2012; difference-in-differences estimate = 2.0 percentage points, p <0.001). By 2018, before 21-day discharge rates became markedly higher in lesser-of states (32.2%) and were stable in full payment states (28.4%, difference-in-differences estimate= 3.6 percentage points, p <0.001). We did not find that bad-debt reimbursement reductions increased short-term readmission and mortality rates, which may imply that the decline in ex-post cost-sharing payments reduced excess SNF utilization. These findings are relevant to recent Congressional Budget Office cost-saving proposals, which include further reductions to federal bad debt reimbursement.

Author

• Kalli Koukounas, Brown University
  Presenting Author