Medicare Payment Reform and Provider Entry and Exit in the Post‐Acute Care Market

Abstract

Objective. To understand the impacts of Medicare payment reform on the entry and exit of post-acute providers. Data Sources. Medicare Provider of Services data, Cost Reports, and Census data from 1991 through 2010. Study Design. We examined market-level changes in entry and exit after payment reforms relative to a preexisting time trend. We also compared changes in high Medicare share markets relative to lower Medicare share markets and for freestanding relative to hospital-based facilities. Data Extraction Methods. We calculated market-level entry, exit, and total stock of home health agencies, skilled nursing facilities, and inpatient rehabilitation facilities from Provider of Services files between 1992 and 2010. We linked these measures with demographic information from the Census and American Community Survey, information on Certificate of Need laws, and Medicare share of facilities in each market drawn from Cost Report data. Principal Findings. Payment reforms reducing average and marginal payments reduced entries and increased exits from the market. Entry effects were larger and more persistent than exit effects. Entry and exit rates fluctuated more for home health agencies than skilled nursing facilities. Effects on number of providers were consistent with entry and exit effects. Conclusions. Payment reform affects market entry and exit, which in turn may affect market structure, access to care, quality and cost of care, and patient outcomes. Policy makers should consider potential impacts of payment reforms on post-acute care market structure when implementing these reforms.Provisions in the Affordable Care Act represent an important restructuring of payment for health care providers. Accountable care organizations and "bundled" payments for acute and post-acute care create incentives for coordinating and reorganizing the delivery of health care by changing provider payment for an episode of care, where care during an episode can be provided

Payment Rates for Personal Care Assistants and the Use of Long-Term Services and Supports among Those Dually Eligible for Medicare and Medicaid

“…Following cuts in Medicare home health reimbursement, the supply of home health agencies contracted as more providers exited and fewer new providers entered the market (Choi and Davitt ; Huckfeldt et al. ).…”

“…Changes in utilization as a result of payment reforms may be partly attributed to corresponding shifts in provider supply. Following cuts in Medicare home health reimbursement, the supply of home health agencies contracted as more providers exited and fewer new providers entered the market (Choi and Davitt 2009;Huckfeldt et al 2013).…”

The effect of prospective payment on admission and treatment policy: Evidence from inpatient rehabilitation facilities

“…We refer to the change in the severity or type of patients seen at IRFs after the implementation of the IRF-PPS as the “selection” effect of the IRF-PPS. Total capacity, measured either by number of IRFs or the number of Medicare certified beds, was increasing before and after the IRF-PPS (Huckfeldt et al 2012). Also, occupancy rates were only 69% in 2002 in the first year of the IRF-PPS (Medicare Payment Advisory Commission 2011b), so IRFs had capacity available to admit newly profitable patients after the IRF-PPS.…”

Effects of payment reform in more versus less competitive markets

“…Although several studies have analyzed the effects of IPS, none have looked at how the effects of the IPS on costs or intensity of care varied by the initial level of competition in the market (P.J. Huckfeldt et al, 2014; Peter J Huckfeldt, Sood, Romley, Malchiodi, & Escarce, 2013; Liu, Long, & Dowling, 2002; McCall, Komisar, Petersons, & Moore, 2001; Murtaugh, McCall, Moore, & Meadow, 2003; Porell, Liu, & Brungo, 2006). In this paper we add to this literature by analyzing how the effects of IPS varied by the level of competition.…”