Bundling post-acute care services into MS-DRG payments

Area of Science:

• Health economics
• Healthcare policy
• Medical informatics

Background:

• The current Medicare fee-for-service system often leads to fragmented post-acute care.
• Bundled payment systems are proposed to incentivize care coordination and improve efficiency.
• The feasibility of integrating post-acute care into existing hospital payment structures needs evaluation.

Purpose of the Study:

• To assess the statistical stability of different designs for a bundled hospital and post-acute care payment system.
• To determine if incorporating chronic illness burden improves payment accuracy for post-acute care bundles.
• To evaluate the feasibility of a combined hospital and post-acute care payment bundle.

Main Methods:

• Medicare Severity-Diagnosis Related Groups (MS-DRGs) were analyzed.
• MS-DRGs were subdivided by chronic illness burden.
• Statistical performance (R²) was evaluated using Medicare data across various post-acute care windows and service combinations.

Main Results:

• Including chronic illness subclasses significantly improved the statistical performance (R²) of MS-DRGs for post-acute care bundles.
• MS-DRGs alone are insufficient for accurate post-acute care payment.
• Higher R² values were observed with longer post-acute care windows and fewer bundled services.

Conclusions:

• Developing a payment system that integrates post-acute care services into the MS-DRG bundle is feasible.
• This integrated approach can create financial incentives for providers to enhance care coordination.
• Improved efficiency and quality of outcomes are potential benefits of this payment model expansion.