Initial home health outcomes under prospective payment

Health Services Research, Feb, 2005 by Robert E. Schlenker, Martha C. Powell, Glenn K. Goodrich

The Prospective Payment System (PPS) for Medicare home health services was implemented in October 2000. The PPS replaced the Interim Payment System (IPS), which was implemented in 1997 as part of the Balanced Budget Act of 1997 (BBA). The IPS placed stringent limits on the Medicare cost based reimbursement system then in effect. Both IPS and PPS were intended to constrain Medicare home health expenditures, which had increased rapidly in the preceding decade (from $2 billion to over $17 billion between 1988 and 1997 [MedPAC 1998]). IPS was associated with dramatic expenditure and visit reductions between 1997 and 1999. Medicare expenditures declined 53 percent to $7.9 billion (CMS 2003), still comprising about 5 percent of total Medicare expenditures. Two recent articles estimate that home health visits per user declined by about 40 percent (Komisar 2002; McCall et al. 2003).

Whether the reduction in visits per user under IPS affected patient outcomes is uncertain. McCall et al. (2002) found mixed results based on selected utilization measures derived from Medicare claims data as proxy outcome indicators. Based on multivariate analyses for fiscal years 1997 and 1999, in the 120 day period after home health admission, hospital admissions decreased while skilled nursing facility admissions, emergency room use, and mortality increased. Although the study authors urge caution in attributing the changes to IPS, it is possible that the stringency of IPS resulted in a decline in patient outcomes.

The PPS encouraged further visit reductions. Under PPS, a prospectively determined per-episode payment rate is case-mix adjusted using 80 mutually exclusive Home Health Resource Groups (HHRGs). Each Medicare episode is classified into an HHRG using a subset of items from the Outcome and Assessment Information Set (OASIS), which has been collected by all Medicare-certified home health agencies since mid-1999 (HCFA 1999a). The PPS creates strong financial incentives to minimize service provision because per-episode payments do not vary according to the quantity or mix of services provided. A study by the U.S. General Accounting Office (USGAO 2002) found that average visits per episode declined by 24 percent (29-22 visits) from just prior to PPS to the first half of 2001. The reduction in visits per episode under PPS compounded the already substantial decline under IPS and raises the possibility of poorer outcomes under PPS. Alternatively, if PPS outcome changes are minimal, then the visit reductions may represent a gain in the overall efficiency and cost-effectiveness of home health care. The OASIS data provide uniform, standardized outcome measures to test these possibilities. (The late-IPS period must be used as the baseline, since national OASIS data were not collected earlier.)

METHODS AND DATA

The objective of this analysis was to determine the changes in outcomes between the pre-PPS (1999-2000) and initial PPS (2001) periods, focusing on home health-care episodes of Medicare beneficiaries aged 65 years and over (the main Medicare group to which per-episode PPS payments apply or would apply in the case of pre PPS episodes). Changes in visits per episode also were analyzed, both to check the above-mentioned GAO finding of fewer visits under PPS and to obtain a preliminary indication of possible changes in the system-level efficiency of Medicare home health care provision under PPS by examining visit and outcome changes for the same samples. The analyses compared random samples of Medicare home health care episodes for the two periods. In order to assess the impact of PPS based on measurement yardsticks that are in current use, we employed the outcome measures and risk factors adopted by CMS for reports to agencies and public reporting.

Outcome Measures and Risk Factors

The OASIS was designed to provide a uniform set of data items for patient-level outcome measurement and risk adjustment. Outcome measures and associated outcome reports are key components of the outcome-based quality improvement (OBQI) approach developed to facilitate continuous quality improvement in home health care (Shanghnessy et al. 1994, 1997, 2002), and 38 end-result outcomes and three utilization outcomes derived from OASIS have been included in outcome reports provided since February 2002 by CMS (http://www.cms.hhs.gov/oasis/) to all Medicare-certified home health agencies. (The outcomes are listed later in Table 3.)

A patient end result outcome is defined as a change in health status between home health start of care (SOC) (admission or readmission) and discharge, with health status covering functional, physiologic, cognitive, and emotional/behavioral dimensions. The health status changes are measured by dichotomous improvement and stabilization indicators. A patient improves when the scale value for the health attribute under consideration shows that the patient is less disabled or dependent at discharge than at SOC. If the patient is at the most independent or "healthiest" extreme of the scale at SOC, it is impossible to improve, and therefore the measure is not defined for such patients. A patient stabilizes when the scale value for the health attribute under consideration shows nonworsening in patient condition (i.e., improvement or no change). If the patient is not able to worsen according to the scale (i.e., is at the most dependent or "sickest" extreme of the scale at SOC), then the measure is not computed. The exclusions for improvement and stabilization measurement typically result in a different sample size for each outcome. End-result outcomes exclude patients transferred or discharged to an inpatient facility (usually hospitalization), since OASIS data for improvement and stabilization measures are not collected for such patients.