Estimating private sector payments for VA specialized inpatient care

To describe methods for estimating what payments to private sector providers might be for specialized inpatient care in the absence of Veterans Health Administration (VA) facilities.

Psychiatric, rehabilitation, domiciliary, partial and day hospitalization, and psychiatric residential treatment programs at six study sites were audited for program content that would meet Medicare criteria for excluding providers from the prospective payment system. A 10% sample of patients in each program was also audited to see if they met VA program criteria. For programs similar to prospective payment system-exempt community-based providers, total days of care were valued at per diem rates calculated for those Medicare providers.

Not all specialized programs at the study sites were similar to private sector programs. Day hospitalization programs did not involve physicians, and inpatient psychiatric care was judged to be payable under acute diagnosis-related groups. Blind rehabilitation was different from any private sector program identified. For programs qualifying under Medicare exclusion rules, a majority of patients would meet criteria with minor changes in VA documentation.

Researchers need to separate specialized inpatient care from acute services in estimating payments. This caution applies especially to rehabilitation, psychiatric, and long-term care, often provided to patients in VA acute bedsections. As with Medicare, benefits extend to higher costs of care not correlated with current measures of acuity or diagnoses. Medicare bases payments on the costs of the specialized providers of this care.