Association Between Medicare Policy Reforms and Changes in Hospitalized Medicare Beneficiaries' Severity of Illness

The measured severity of illness of hospitalized Medicare beneficiaries has increased. Whether this change is associated with payment reforms, concentrated among hospitalizations with principal diagnoses targeted by payment reform, and reflective of true increases in severity of illness is unknown.

To assess whether the expansion of secondary diagnosis codes in January 2011 and the incentive payments for health information technology under the US Health Information Technology for Economic and Clinical Health Act were associated with changes in measured severity of illness and whether those changes are reflective of true increases in underlying patient severity.

This cohort study of Medicare fee-for-service beneficiary discharges (N = 47 951 443) between January 1, 2008, and August 31, 2015, used a regression-discontinuity design to evaluate changes in measured severity of illness after the expansion of secondary diagnoses. Discharge-level linear regression model with hospital fixed effects was used to evaluate changes in measured severity of illness after hospitals' receipt of incentives for health information technology. The change in predictive accuracy of measured severity of illness on 30-day readmissions after the implementation of both policies was evaluated. Data analysis was performed from November 1, 2018, to March 5, 2019.

The primary outcome was patients' measured severity of illness determined by the number of condition categories from secondary discharge diagnosis codes. Measured severity of illness for diagnoses commonly targeted by Medicare policies and untargeted diagnoses was assessed.

In total, 47 951 443 discharges at 2850 hospitals were included. In 2008, these beneficiaries included 3 882 672 women (58.5%) with a mean (SD) age of 78.5 (8.4) years. In 2014, the discharges included 3 377 137 women (57.8%) with the mean (SD) age of 78.4 (8.7) years. The Centers for Medicare & Medicaid Services expansion of secondary diagnoses was associated with a 0.348 (95% CI, 0.328-0.367; P < .001) change in condition categories for all diagnoses, 0.445 (95% CI, 0.419-0.470; P < .001) for targeted diagnoses, and 0.321 (95% CI, 0.302-0.341; P < .001) for untargeted diagnoses. Health information technology incentives were associated with a 0.013 (95% CI, 0.004-0.022; P = .005) change in condition categories for all diagnoses, 0.195 (95% CI, 0.184-0.207; P < .001) for targeted diagnoses, and -0.016 (95% CI, -0.025 to -0.007; P < .001) for untargeted diagnoses. Minimal improvements in predictive accuracy were observed.

Changes in Centers for Medicare & Medicaid Services policies appear to be associated with increases in measured severity of illness; these increases do not appear to reflect substantive changes in true patient severity.