Physician's Capitation Trends: HMO savings attributed to shorter hospital stays
Physician's Capitation Trends
HMO savings attributed to shorter hospital stays
Admission rates are about the same
The cost-cutting pressures of capitation may influence the length of hospital stay, but not the number of hospital admissions.
That’s the finding of a new Health Care Financing Administration-funded (HCFA) study that looks at whether "discretionary" hospitalizations are fewer for patients covered by Medicare capitation contracts as opposed to those in Medicare fee-for-service contracts.1
Hospital admissions, or the perception of cutbacks in hospital admissions, is a hot political topic. Often public complaints surface that capitation’s financial constraints are pressuring doctors to cut back hospital care at the peril of patients.
Admitting practices similar
In HCFA’s hospital admissions analysis, however, researchers are staking a claim that the numbers don’t bear out the complaint that capitated beneficiaries are shunned away from a hospital’s doors. But, the data do suggest that while capitated patients may be admitted at the same rate, they don’t stay in a hospital as long as fee-for-service (FFS) patients.
"These data provide little empirical support for the main hypothesis: High discretion hospital admissions account for a significantly greater portion of total hospital admissions for Medicare FFS beneficiaries than for Medicare HMO enrollees," conclude Frank W. Porell, PhD, and Leonard Gruenberg, PhD, lead researchers of the study. Porell is a professor of gerontology at the University of Massachusetts in Boston, and Gruenberg is president of DataChron Health Systems Inc. of Cambridge, MA.
"Discretionary" admissions refers to the concept that some hospitalizations are provided at the discretion of a physician rather than a "must do" admission. The study classifies types of admissions as "low discretion," "moderate discretion," and "high discretion." In other words, the higher the discretion level or score, the greater latitude the physician had in recommending hospitalization.
The scores are based on principal diagnosis codes extracted from medical records from hospitals in a sample of four high-Medicare HMO states — California, Florida, Massachusetts, and New York. The data collected represented about 60% of the Medicare HMO enrollees in the United States. Data were not that current, dating back to 1992.
To define "discretion" levels, Porell and Gruenberg used three different scoring methods, with each one yielding the same overall conclusion. One system relies on a panel of three physicians who were asked to score from three to 12 individual ICD-9-CM principal diagnoses as low (score of 3-4), medium (score of 5-8), and high discretion (score of 9 or more) levels. Specifically, the scoring system worked this way:
• One point was assigned to diagnoses with a low-discretion rating and with no other identified problem.
• Two points were assigned to diagnoses with a moderate-discretion rating, and with no other identified problem.
• Three points were assigned to diagnoses with either a high-discretion rating, a designation of overstay potential, or an ambiguous coding.
• Four points were assigned if more than one of the problems of high discretion, overstay potential, or ambiguous coding was noted.
The results found that little variation occurs in hospital admissions between HMO and non-HMO patients.
HCFA’s investigators acknowledge some potential weaknesses in the analysis. For one, when they tested the physician panels scoring against other scoring methodologies, scores were not perfectly consistent.
"The rather modest level of agreement among the alternative discretion classifications is suggestive of some conceptual difficulties in distinguishing high-discretion hospitalizations strictly on the basis of clinical judgments about diagnostic codes," Porell and Gruenberg write. Nevertheless, "the overall pattern of results was quite similar." Another weakness might lie in the possibility that Medicare HMO enrollees tend to be healthier than FFS enrollees, the authors suggest. In their study, controls for health status were made based on age and gender rather than on more precise measures.
Featured in a recent Blue Cross-Blue Shield journal, the article offers a warning to insurers: These findings do not support increasing reimbursements for HCFA’s new risk-adjusted payment system, the principal inpatient diagnostic cost group (PIP-DCG) model.
Insurers are concerned that a plan that has been successful in controlling costs by reducing inpatient admissions would be penalized under the PIP-DCG model with lower capitation payments. Since hospital admission rates are similar between HMO and FFS patients, "we believe our study results provide no empirical support for any modifications to a PIP-DCG payment model to take account of the discretion level of hospitalizations."
Reference
1. Porell FW, Gruenberg F. Discretionary hospital use and diagnostic risk adjustment of Medicare HMO capitation rates. Inquiry: Blue Cross and Blue Shield Association and Blue Cross and Blue Shield of the Rochester Area 2000; 37:162-172.
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