Hospital transfers account for increasing percentage of Medicare costs

Healthcare Financial Management, July, 2005

The rate of increase in Medicare admissions to acute care hospitals from 2000 through 2003 was far outpaced by increases in average charges and costs for those admissions, according to data in CMS's Medicare Provider Analysis and Review file. A review of MedPAR inpatient hospital data sets found that during 2000-03, Medicare admissions for acute care hospitals increased 8.2 percent, while corresponding average charges and costs increased 44 percent and 29 percent, respectively.

A striking statistic was that the increase in charges and costs was most rapid for the 8 percent of admissions that came from sources other than physician referrals or transfers from a hospital's own emergency department. These numbers represent a significant amount of money for the nation's hospitals. The MedPAR data showed that admissions from sources other than physician referrals and in-hospital transfers from EDs averaged more than 1 million annually, with charges exceeding $32 billion and costs exceeding $14 billion for CMS in 2003.

The charges and costs are especially relevant for admissions due to transfers from other hospitals. A review of data regarding transfers from other hospitals showed the increase in the number of admissions during this period mirrored the national average (8.8 percent), but the increases in the average charges (51 percent increase) and average costs (38 percent increase) were both higher than the national rate for all admissions. A more detailed examination was conducted, therefore, to determine why charges and costs were rising more rapidly with admissions due to transfers from other hospitals. The review identified five diagnosis-related groups that accounted for 7.2 percent of these admissions and 15 percent of costs:

* 109--coronary bypass without percutaneous transluminal coronary angioplasty or cardiac catheterization

* 144--other circulatory system diagnosis with complication conditions

* 483--tracheostomy with mechanical ventilation 96 hours or principal diagnosis except face, mouth, and neck

* 516--percutaneous cardiovascular procedures with acute myocardial infarction

* 517--percutaneous cardiovascular procedures without acute myocardial infarction, with coronary artery stent implant

These data suggest that acute care hospitals should closely monitor admissions they receive from other hospitals, particularly those related to coronary care.

AVERAGE CHARGES AND COSTS FOR HOSPITAL ADMISSIONS RESULTING FROM
TRANSFERS FROM OTHER HOSPITALS, 2000-03

DRG    2000     2003      Percentage  2000      2003      Percentage
       Volume   Volume    Change      Average   Average   Change
                                      Charges   Charges

109      1,309     1,354        3.44   $53,452   $84,823       58.69
144        918      1011       10.13   $15,656   $26,183       67.25
483        780       943       20.90  $193,697  $288,897       49.15
516      3,214     2,975      (7.44)   $38,586   $42,876       11.11
517      3,557     2,952        (17)   $34,328   $36,726        6.99

DRG    2000     2003      Percentage
       Average  Average   Change
       Costs    Costs

109    $22,466   $32,565       44.95
144     $7,126   $10,934       53.44
483    $82,283  $114,652       39.34
516    $16,301   $17,026        4.45
517    $14,098   $14,207        0.77