Medicare Use in the Last Ninety Days of Life Gary L. Gaumer and Joanna Stavins The introduction of Medicare's prospective payment system (PPS) has led to changes in the way hospitals are being used. This article examines concomitant changes in the use of Medicare-covered services during the last 90 days oflife, using data on more than 34,000 Medicare beneficiaries who died during the years 1982-1986. Wefocus on questions pertaining to changes in practice patterns that include location of death, hospital utilization, use of other covered services, and spending. We find that use of hospitals and other health services by Medicare beneficiaries during the last 90 days of life changed markedly over this period, which included the introduction of PPS in late 1983. The percentage of deaths occurring in hospitals decreased sharply from 1982 to 1986, especially in PPS states relative to waivered states; this effect seems primarily due to reductions in length of stay rather than reduced admission rates, which did not change significantly. Use of home care, durable medical equipment (DME), and physicians' office services also increased sharply during the last 90 days of life, but with no consistent evidence that the introduction of PPS was associated with these changes or with the level or mix of Medicare expenditures for these patients. Medicare spending in this period of life rose at the same rate as medical care price inflation, and about 75 percent of reimbursements continued to be hospital payments, despite the utilization changes.
This article examines changes in Medicare use during the last 90 days of life and focuses on the role of the prospective payment system (PPS) Supported under a contract (HCFA 500-85-0015) with the Health Care Financing Administration. Address correspondence and requests for reprints to Gary L. Gaumer, Ph.D., Managing Vice President, Abt Associates Inc., 55 Wheeler Street, Cambridge, MA 02138. Joanna Stavins, M.A. is now with the Department of Economics, Harvard University. This article, submitted to Health Services Research on March 23, 1989, was revised and accepted for publication on March 8, 1991.
726
HSR: Health Services Research 26:6 (February 1992)
in these changes. Introduced in late 1983, the PPS was intended to encourage hospital administrators to find ways to economize on spending for the hospital stays of Medicare beneficiaries. At the same time, the Health Care Financing Administration implemented the professional review organization (PRO) program, which aimed to reduce unnecessary admissions and to control potential untoward activities under the PPS, such as unnecessary readmissions and dangerously shortened stays. These events, along with some important technological changes, have led to reduced admission rates, shortened stays, and increased use of home care, skilled nursing homes, and a variety of other outpatient services (Prospective Payment Assessment Commission 1988; Gornick and Hall 1988; Schmitz 1989). Patterns of care during episodes of illness provide the best opportunity to examine physician responses to various pressures to make less use of the hospital. Here we investigated another "type" of episode: the last 90 days of life. Although this concept does not actually represent an episode of illness, it is instructive because of the intense use of health services associated with it (McCall 1984; Riley et al. 1986; Garfinkel 1988) and because of the emphasis policymakers place on the adequacy of Medicare when beneficiaries may need it most. Few published studies on the nature of death episodes are available. A study on the use and costs of Medicare services in the last two years of life (Lubitz and Prihoda 1984) reports that decedents comprised 5.9 percent of their study group but accounted for 28 percent of Medicare expenditures; moreover, the study finds that 46 percent of costs in the last year of life are spent in the last 60 days. Work on the last year of life of Medicare beneficiaries (Riley et al. 1987) indicates that the cause of death is an important determinant of reimbursement levels. Studies of cancer patients (Greer, Mor, Morris, et al. 1986; Kidder, Merrell, and Dohan 1988) point to strong organizational influences on the use of home and inpatient services in the 50-day period preceding death. For example, in the Greer study, hospice patients receiving home care spent about 8 of their last 50 days in hospitals and received about 20 home care visits; hospital-based hospice patients had about twice as much hospital care and half as many home visits. Patients not enrolled in hospice care spent 23 of their last days in the hospital and received about 4 home care visits. Clearly, patterns of care for terminally ill patients are amenable to considerable substitution, and these patterns appear to be readily adaptive to orga-
nizational incentives. In view of general trends in length of stay and admission rates, a main objective of this article is to describe corollary trends in the use of
Medicare in Last Ninety Days of Life
727
hospital services during the last 90 days of life. Have trends in general admitting and discharge practices led to lower admission rates and days of care in the "death episode"? Have the pressures to reduce length of stay changed the patterns of use of the hospital as the place of death? Secondarily, we are concerned about the possible substitutions for hospital care that may be occurring in the death episode. If less hospital care is being used, are more home health, nursing home, or professional office services being used? And, overall, have changed patterns of Medicare benefit use altered total reimbursement levels for the last 90 days of life? In examining these questions, we first explore recent trends in measures relating to hospital use, hospital mortality, and non-hospital service use. We then use multivariate methods to test simple hypotheses about the temporal patterns of changes before and after the introduction of the Medicare PPS.
DATA A simple random sample of 8,000 deaths per year for the 1982-1986 period was drawn from the 5 percent Medicare eligibility file. The criteria for inclusion were a valid indicator of the date of death, Part A entitlement during the year of death, no indication of enrollment in a Medicare hospice program or health maintenance organization in the year of death, and residence in Washington, D.C. or one of the contiguous states. Data on the use of Part A and Part B Medicare services during the 90-day period before death were obtained in each case from paid stay record and billing files. The files contain data on three types of Part A services: inpatient hospitalization (from the MEDPAR files), use of a skilled nursing facility, and use of home health care. The data on Part B services included use of the hospital outpatient department, durable medical equipment (DME), physician inpatient services, and physician ambulatory services. Area variables describing the health care field as well as population characteristics based on county of residence were also amended to the episode files; beneficiary demographic characteristics from enrollment records (date of death, age, race, sex, and location codes) were also included. Dates of admission and discharge from the hospital are recorded precisely, allowing us to note whether or not a patient died in the hospital. Unfortunately, the files do not indicate where deaths outside the hospital occurred. We know whether the beneficiary used a covered
728
HSR: Health Services Research 26:6 (February 1992)
skilled nursing facility (SNF), home health care, or Part B service in the period before death, but we do not know the exact dates of admission, discharge, or services, and thus cannot determine whether the patient was under active care at the time of death. Therefore, we divided the sample into five mutually exclusive and hierarchical groups: (1) beneficiaries who died in the hospital; if not, then (2) other beneficiaries whose deaths were preceded by a skilled nursing facility stay and whose SNF stay occurred after the last hospital discharge in the file; (3) persons who used the services of a home health agency (HHA) within 90 days of death but were not included in the two groups just described; (4) of the remainder, persons who had evidence of Part B or outpatient care; and (5) other persons who had no record of use of covered Medicare services within 90 days of death. In three states-Kentucky, Ohio, and Pennsylvania- substantial fractions of bills for inpatient or home health care were unavailable (the bills had been returned to the intermediary for recoding and had not been reentered in HCFA's statistical file systems); cases from these states were dropped from the analysis. In addition, approximately 100 cases with unreconciled inpatient bills more than 30 days after the recorded date of death were dropped. A total of 34,576 cases were analyzed.
DESCRIPTIVE ANALYSIS The descriptive analysis examines the study population, trends in hospital use patterns, and differences between use trends in PPS states and waiver states. Table 1 shows the demographic features of the Medicare beneficiaries we studied. A gradual increase in longevity was evident across the short period of the study. The average age at death rose from 77.9 in 1982 to 78.5 in 1986. This trend was most pronounced among women, persons in rural areas, persons with end-stage renal disease, and disabled persons. There were smaller improvements in longevity in the other segments of the Medicare population. Table 1 also suggests the effects of an influenza epidemic in 1985. The trend toward increased longevity was slightly reversed that year, and average ages at death fell in all groups except patients with end-stage renal disease (ESRD). The ESRD anomaly, and other changes in the age-at-death trends also reflect systematic changes in the ages of covered persons. While the "aged" group is large and stable demographically, one can see from the trend in the group with end-stage renal disease that efforts to
Medicare in Last Ninety Days of Life
729
Table 1: Characteristics of the Study Population Number of cases Average age at death 90 (%Yo) Female (%) Average age of women Average age of men Nonwhite (%) Average age of nonwhites Average age of whites Aged (%) Average age of aged Disabled (%) Average age of disabled With ESRD* (%) Average age of subjects with ESRD Urban residents (%) Average age of urban residents Average age of rural residents *End-stage renal disease.
1982 6,947 77.92 19.45 16.94 18.27 17.72 15.43 12.19 49.33 79.90 76.00 10.23 75.67 78.18 96.08 79.00 3.57 52.49 0.92 60.37 69.30 78.04 77.65
1983 6,962 78.12 19.20 16.40 17.85 18.41 15.15 12.97 48.95 80.21 76.11 10.70 75.84 78.39 95.50 79.26 4.11 54.53 1.03 62.72 69.97 78.14 78.07
1984 6,889 78.49 18.77 16.10 18.86 16.98 14.69 14.60 50.54 80.82 76.10 10.03 76.15 78.75 95.66 79.57 4.08 55.23 0.87 64.16 70.68 78.44 78.62
1985 6,915 78.31 18.66 16.69 18.08 17.93 14.71 13.97 50.56 80.60 75.96 10.85 75.87 78.60 95.03 79.55 4.66 54.90 1.08 65.84 68.40 78.23 78.46
1986 6,863 78.49 17.78 16.44 18.45 18.43 15.21 13.70 49.75 80.80 76.21 11.67 76.17 78.80 94.30 79.83 5.09 56.73 1.31 64.65 67.55 78.45 78.58
extend benefits for patients with this disorder to clinically "marginal" persons tended to increase the average age of the recipient population. The disabled group has also changed; efforts to limit the eligibility of the "working disabled" have increased the ,average age of eligible persons. HOSPITALIZATION AT THE TIME OF DEATH
Marked changes in the use of Medicare coverage services over the 1982-1986 period decreased the proportion of deaths occurring in all hospitals from 51.1 percent in 1982 to 45.4 percent in 1986 (Table 2). An increase occurred in the proportion of persons who used home care and other Medicare-covered services in the last 90 days of life. In the case of home care, the trend was evident throughout the period, no doubt the reflection of an extensive liberalization of the HHA benefit in 1981. This included, among other changes, dropping the require-
730
HSR: Health Services Research 26:6 (February 1992)
Table 2: Medicare Provider at the Time of Death 1982 Death in hospital Death preceded by services of skilled nursing facility Death preceded by home care services Death preceded by other Part B services No Medicare services in 90 days before death
1983
1986
51.1 1.9
1984 1985 % of Subjects 50.7 46.7 44.6 1.7 2.2 2.2
6.2 31.5 9.3
6.8 31.3 9.6
9.7 34.7 8.2
8.3 33.7 9.1
9.3 35.9 8.0
45.4 2.0
Table 3: Percentage of Sample Deaths That Occur in the Hospital PPS status States not under PPS States under PPS Race White Nonwhite Age
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Medicare in Last Ninety Days of Life
739
use of skilled nursing facilities were more severe than those on home care services, resulting in less measured substitution between skilled nursing facilities and hospital care over the short observational period. And the home care industry in waivered states (particularly New York) has been better developed and more heavily used (see Table 5); hence, we may be observing some catch-up in PPS states. The level of Part B activities seems to have been influenced by PPS, suggesting substitution of outpatient for inpatient care. Physician office reimbursements rose about 20 percent (p = .004) after PPS was introduced (relative to waiver state trends). Total Part B payments and inpatient Part B reimbursements (mainly physician payments) had fairly large positive coefficients (4 to 6 percent of the respective means) but were not statistically significant. In this analysis, the introduction of PPS did not appear to alter the likelihood that persons would receive some (or no) Medicare-covered service during the last 90 days of life; the logit coefficients suggest a reduction in the fraction not using services, but the standard errors are large. The models (Table 7) show some important baseline differences between states where PPS was waived and states where it was implemented; the coefficient for the waivered state dummy captures these differences. Hospital admission rates were similar, but after adjustments, states where PPS was waived had more days of hospital care and offered a greater likelihood of death in a hospital. These states also had lower baseline levels of reimbursement for skilled nursing facilities and higher levels of reimbursement for care in a physician's office. This pattern is consistent with other studies showing longer lengths of stay and higher inpatient mortality in New York and New Jersey, where shortages of nursing home beds are pervasive (Gaumer et al. 1987). Models also show that the availability of health services has an important influence on use and spending in the last 90 days of life. In the hospital death and admission rate models there are strong supply influences. Hospital bed availability increases both the likelihood of admission, and the likelihood of death occurring in the hospital. The signs on measures of physician availability and nursing home bed availability suggest substitution for hospital care, showing that higher levels of resources are associated with a reduced likelihood of admission and less chance of death occurring in the hospital. The availability of hospital beds tended to be positively associated with days of care (as found by Ginsburg and Koretz 1983), but negatively associated with most reimbursement measures. This would sug-
740
HSR: Health Services Research 26:6 (February 1992)
gest the substitution between hospital days and SNF care, home care, physicians' services, and other services. Interestingly, inpatient payments were also lower when more beds were available, suggesting competitive influences rather than supply inducement. More physicians per capita, on the other hand, were associated with lower admission rates, fewer days of care, lower in-hospital death rates, and higher levels of reimbursement for every category studied, including physician payments. This suggests substitution against hospitals but the absence of competition in medical markets. Age was significant in all of the regressions except the hospital admission rate model. Although the effects of increased age, both in lowering the probability of hospital admission and death in the hospital and in reducing the number of inpatient days, were small, the estimates in reimbursement models were not. Older beneficiaries, holding other variables constant, received less inpatient, Part B, and home care.
DISCUSSION The most important finding here is that, for the first time in Medicare's history, beneficiaries are likely to die somewhere other than a hospital. Our results indicate that PPS has quickened the downward trend in the fraction of Medicare beneficiaries who die in the hospital, mainly through effects on the average length of stay. Although trends in the last 90 days of life indicated fewer days of inpatient care, general access to covered services and hospital admission rates did not decline. Indeed, it appears that PPS has simply led to more frequent discharge of dying patients to the home environment, with accompanying physician, DME, and home care services. These results are similar to but not as pronounced as those reported among terminally ill patients exposed to hospice programming (Greer, Mor, Morris, et al. 1986). The exception is that physician services appeared as a substitute for inpatient care in our sample, whereas Greer et al. found a complementary relationship between the two types of care among the terminally ill. These general associations between PPS and patterns of practice in the 90 days before death represent important alterations in the way Medicare benefits are being used in the final stages of life. The observed changes are consistent with general PPS incentives to reduce the amount of inpatient care delivered to beneficiaries, and to increase use of home- or SNF-based services, particularly to allow lengths of stay to be safely shortened. Yet the structure of Medicare payments for
Medicare in Last Ninety Days of Life
741
the last 90 days of life is relatively unchanged, still dominated by hospitals, which continue to receive about 75 percent of Medicare payments. Whatever substitutions are being made seem not to be materially altering the structure of payments or the continued importance of hospital payments in cost-control policymaking. We also note that the observed changes in the use of hospitals as the site of death have implications for program monitoring. The use of hospital discharge mortality (or even risk-adjusted hospital mortality) as a metric for quality would seem less useful in view of the significant trends in location of death. The trends we note in the place of death suggest that hospital performance studies should prefer death rates based on days following admission. Despite evidence of apparent substitution of nonhospital services, and no evidence of hampered access, we cannot conclude that the recent trends are leaving unchanged the quality of care delivered under Medicare's PPS. While the apparent patterns -of substituting posthospital care for shortened stays, and unchanged admission rates-are comforting, and while the entire pattern of trends is probably consistent with the hopes of policymakers, we cannot conclude that the health or satisfaction of beneficiaries are not affected by PPS.
NOTES 1. A recent econometric study by Schmitz (1989) finds significant changes in relative length of stay (LOS) trends in PPS and waiver states in 1983 and 1984, suggesting relative reductions in LOS under PPS in those years. 2. The fact that trends are more pronounced in states under PPS is a very important design consideration in the statistical models presented later in the article. In these models the specification of PPS effects captures any divergence in trend between PPS and waivered states, whether due to a break in trend for the PPS states or for the waivered states. These data suggest that the predominant temporal change is in the PPS states, lending support to the view that PPS (or something else unique to PPS states) may have been the source of measured differences in trend between the two groups of states. 3. A set of important changes in the Medicare HHA benefit in 1981 led to widespread expansion of the industry and of use of services (Williams, Cella, and Gaumer 1984). The most important change was elimination of the requirement for prior hospitalization. 4. Since the group of persons using no services is probably dominated by instances of sudden onset of acute disease, the measure probably is an insensitive marker for changes in constraints on use. This set of persons also necessarily includes persons who may have used services but did not submit bills for reasons of the deductible or other considerations.
742
HSR: Health Services Research 26:6 (February 1992)
REFERENCES Garfinkel, S., G. Riley, and V. Iannacchione. "High-Cost Users of Medical Care." Health Care Financing Review 9, no. 4 (Summer 1988): 41-52. Gaumer, G., E. Poggio, C. Collen, C. Sennett, and B. Schmitz. "Effects of State Prospective Reimbursement Programs on Patient Care." Medical Care 27, no. 7T(November 1987): 724-36. Ginsburg, P., and D. Koretz. "Bed Availability and Hospital Utilization: Estimates of the Roemer Effect." Health Care Financing Review 5, no. 1 (Fall 1983): 87-92. Gornick, M., and M. Hall. "Trends in Medicare Use of Post Hospital Care." Health Care Financing Review 1988 Annual Supplement (December 1988): 27-38. Greer, D. S., V. Mor, J. N. Morris, S. Sherwood, D. Kidder, and H. Birnhaum. "An Alternative in Terminal Care: Results of the National Hospice Study."Journal of Chronic Diseases 39, no 1 (1986): 9-26. Kidder, D., K. Merrell, and D. Dohan. Medicare Hospice Benefit Program Evaluation, Health Care Financing Grants and Contract Report. Baltimore, MD: HCFA, 1988. Lubitz, J., and R. Prihoda. "The Use and Costs of Medicare Services in the Last 2 Years of Life." Health Care Financing Review 5, no. 3 (Spring 1984): 117-31. McCall, N. "Utilization and Costs of Medicare Services by Beneficiaries in * Their Last Year of Life." Medical Care 22, no. 4 (April 1984): 329-42. Prospective Payment Assessment Commission. Technical Appendices to the Report and Recommendations to the Secretary. Washington, DC: DHHS, March 1988. Riley, G., J. Lubitz, R. Prihoda, and E. Rabey. "The Use and Costs of Medicare Services by Cause of Death." Inquiry 24, no. 3 (Fall 1987): 233-44. Riley, G., J. Lubitz, R. Prihoda, and M. Stevenson. "Changes in the Distribution of Medicare Expenditures among Aged Enrollees, 1969-1982." Health Care Financing Review 7, no. 3 (Spring 1986): 53-63. Schmitz, R. Effects of PPS on Per Capita Medicare Utilization. Cambridge, MA: Abt Associates Inc., February 1989. Williams, J., M. Cella, and G. Gaumer. Home Health Services: An Industry in Transition. Cambridge, MA: Abt Associates Inc., February 1984.
This article examines changes in Medicare use during the last 90 days of life and focuses on the role of the prospective payment system (PPS) Supported under a contract (HCFA 500-85-0015) with the Health Care Financing Administration. Address correspondence and requests for reprints to Gary L. Gaumer, Ph.D., Managing Vice President, Abt Associates Inc., 55 Wheeler Street, Cambridge, MA 02138. Joanna Stavins, M.A. is now with the Department of Economics, Harvard University. This article, submitted to Health Services Research on March 23, 1989, was revised and accepted for publication on March 8, 1991.
726
HSR: Health Services Research 26:6 (February 1992)
in these changes. Introduced in late 1983, the PPS was intended to encourage hospital administrators to find ways to economize on spending for the hospital stays of Medicare beneficiaries. At the same time, the Health Care Financing Administration implemented the professional review organization (PRO) program, which aimed to reduce unnecessary admissions and to control potential untoward activities under the PPS, such as unnecessary readmissions and dangerously shortened stays. These events, along with some important technological changes, have led to reduced admission rates, shortened stays, and increased use of home care, skilled nursing homes, and a variety of other outpatient services (Prospective Payment Assessment Commission 1988; Gornick and Hall 1988; Schmitz 1989). Patterns of care during episodes of illness provide the best opportunity to examine physician responses to various pressures to make less use of the hospital. Here we investigated another "type" of episode: the last 90 days of life. Although this concept does not actually represent an episode of illness, it is instructive because of the intense use of health services associated with it (McCall 1984; Riley et al. 1986; Garfinkel 1988) and because of the emphasis policymakers place on the adequacy of Medicare when beneficiaries may need it most. Few published studies on the nature of death episodes are available. A study on the use and costs of Medicare services in the last two years of life (Lubitz and Prihoda 1984) reports that decedents comprised 5.9 percent of their study group but accounted for 28 percent of Medicare expenditures; moreover, the study finds that 46 percent of costs in the last year of life are spent in the last 60 days. Work on the last year of life of Medicare beneficiaries (Riley et al. 1987) indicates that the cause of death is an important determinant of reimbursement levels. Studies of cancer patients (Greer, Mor, Morris, et al. 1986; Kidder, Merrell, and Dohan 1988) point to strong organizational influences on the use of home and inpatient services in the 50-day period preceding death. For example, in the Greer study, hospice patients receiving home care spent about 8 of their last 50 days in hospitals and received about 20 home care visits; hospital-based hospice patients had about twice as much hospital care and half as many home visits. Patients not enrolled in hospice care spent 23 of their last days in the hospital and received about 4 home care visits. Clearly, patterns of care for terminally ill patients are amenable to considerable substitution, and these patterns appear to be readily adaptive to orga-
nizational incentives. In view of general trends in length of stay and admission rates, a main objective of this article is to describe corollary trends in the use of
Medicare in Last Ninety Days of Life
727
hospital services during the last 90 days of life. Have trends in general admitting and discharge practices led to lower admission rates and days of care in the "death episode"? Have the pressures to reduce length of stay changed the patterns of use of the hospital as the place of death? Secondarily, we are concerned about the possible substitutions for hospital care that may be occurring in the death episode. If less hospital care is being used, are more home health, nursing home, or professional office services being used? And, overall, have changed patterns of Medicare benefit use altered total reimbursement levels for the last 90 days of life? In examining these questions, we first explore recent trends in measures relating to hospital use, hospital mortality, and non-hospital service use. We then use multivariate methods to test simple hypotheses about the temporal patterns of changes before and after the introduction of the Medicare PPS.
DATA A simple random sample of 8,000 deaths per year for the 1982-1986 period was drawn from the 5 percent Medicare eligibility file. The criteria for inclusion were a valid indicator of the date of death, Part A entitlement during the year of death, no indication of enrollment in a Medicare hospice program or health maintenance organization in the year of death, and residence in Washington, D.C. or one of the contiguous states. Data on the use of Part A and Part B Medicare services during the 90-day period before death were obtained in each case from paid stay record and billing files. The files contain data on three types of Part A services: inpatient hospitalization (from the MEDPAR files), use of a skilled nursing facility, and use of home health care. The data on Part B services included use of the hospital outpatient department, durable medical equipment (DME), physician inpatient services, and physician ambulatory services. Area variables describing the health care field as well as population characteristics based on county of residence were also amended to the episode files; beneficiary demographic characteristics from enrollment records (date of death, age, race, sex, and location codes) were also included. Dates of admission and discharge from the hospital are recorded precisely, allowing us to note whether or not a patient died in the hospital. Unfortunately, the files do not indicate where deaths outside the hospital occurred. We know whether the beneficiary used a covered
728
HSR: Health Services Research 26:6 (February 1992)
skilled nursing facility (SNF), home health care, or Part B service in the period before death, but we do not know the exact dates of admission, discharge, or services, and thus cannot determine whether the patient was under active care at the time of death. Therefore, we divided the sample into five mutually exclusive and hierarchical groups: (1) beneficiaries who died in the hospital; if not, then (2) other beneficiaries whose deaths were preceded by a skilled nursing facility stay and whose SNF stay occurred after the last hospital discharge in the file; (3) persons who used the services of a home health agency (HHA) within 90 days of death but were not included in the two groups just described; (4) of the remainder, persons who had evidence of Part B or outpatient care; and (5) other persons who had no record of use of covered Medicare services within 90 days of death. In three states-Kentucky, Ohio, and Pennsylvania- substantial fractions of bills for inpatient or home health care were unavailable (the bills had been returned to the intermediary for recoding and had not been reentered in HCFA's statistical file systems); cases from these states were dropped from the analysis. In addition, approximately 100 cases with unreconciled inpatient bills more than 30 days after the recorded date of death were dropped. A total of 34,576 cases were analyzed.
DESCRIPTIVE ANALYSIS The descriptive analysis examines the study population, trends in hospital use patterns, and differences between use trends in PPS states and waiver states. Table 1 shows the demographic features of the Medicare beneficiaries we studied. A gradual increase in longevity was evident across the short period of the study. The average age at death rose from 77.9 in 1982 to 78.5 in 1986. This trend was most pronounced among women, persons in rural areas, persons with end-stage renal disease, and disabled persons. There were smaller improvements in longevity in the other segments of the Medicare population. Table 1 also suggests the effects of an influenza epidemic in 1985. The trend toward increased longevity was slightly reversed that year, and average ages at death fell in all groups except patients with end-stage renal disease (ESRD). The ESRD anomaly, and other changes in the age-at-death trends also reflect systematic changes in the ages of covered persons. While the "aged" group is large and stable demographically, one can see from the trend in the group with end-stage renal disease that efforts to
Medicare in Last Ninety Days of Life
729
Table 1: Characteristics of the Study Population Number of cases Average age at death 90 (%Yo) Female (%) Average age of women Average age of men Nonwhite (%) Average age of nonwhites Average age of whites Aged (%) Average age of aged Disabled (%) Average age of disabled With ESRD* (%) Average age of subjects with ESRD Urban residents (%) Average age of urban residents Average age of rural residents *End-stage renal disease.
1982 6,947 77.92 19.45 16.94 18.27 17.72 15.43 12.19 49.33 79.90 76.00 10.23 75.67 78.18 96.08 79.00 3.57 52.49 0.92 60.37 69.30 78.04 77.65
1983 6,962 78.12 19.20 16.40 17.85 18.41 15.15 12.97 48.95 80.21 76.11 10.70 75.84 78.39 95.50 79.26 4.11 54.53 1.03 62.72 69.97 78.14 78.07
1984 6,889 78.49 18.77 16.10 18.86 16.98 14.69 14.60 50.54 80.82 76.10 10.03 76.15 78.75 95.66 79.57 4.08 55.23 0.87 64.16 70.68 78.44 78.62
1985 6,915 78.31 18.66 16.69 18.08 17.93 14.71 13.97 50.56 80.60 75.96 10.85 75.87 78.60 95.03 79.55 4.66 54.90 1.08 65.84 68.40 78.23 78.46
1986 6,863 78.49 17.78 16.44 18.45 18.43 15.21 13.70 49.75 80.80 76.21 11.67 76.17 78.80 94.30 79.83 5.09 56.73 1.31 64.65 67.55 78.45 78.58
extend benefits for patients with this disorder to clinically "marginal" persons tended to increase the average age of the recipient population. The disabled group has also changed; efforts to limit the eligibility of the "working disabled" have increased the ,average age of eligible persons. HOSPITALIZATION AT THE TIME OF DEATH
Marked changes in the use of Medicare coverage services over the 1982-1986 period decreased the proportion of deaths occurring in all hospitals from 51.1 percent in 1982 to 45.4 percent in 1986 (Table 2). An increase occurred in the proportion of persons who used home care and other Medicare-covered services in the last 90 days of life. In the case of home care, the trend was evident throughout the period, no doubt the reflection of an extensive liberalization of the HHA benefit in 1981. This included, among other changes, dropping the require-
730
HSR: Health Services Research 26:6 (February 1992)
Table 2: Medicare Provider at the Time of Death 1982 Death in hospital Death preceded by services of skilled nursing facility Death preceded by home care services Death preceded by other Part B services No Medicare services in 90 days before death
1983
1986
51.1 1.9
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Medicare in Last Ninety Days of Life
739
use of skilled nursing facilities were more severe than those on home care services, resulting in less measured substitution between skilled nursing facilities and hospital care over the short observational period. And the home care industry in waivered states (particularly New York) has been better developed and more heavily used (see Table 5); hence, we may be observing some catch-up in PPS states. The level of Part B activities seems to have been influenced by PPS, suggesting substitution of outpatient for inpatient care. Physician office reimbursements rose about 20 percent (p = .004) after PPS was introduced (relative to waiver state trends). Total Part B payments and inpatient Part B reimbursements (mainly physician payments) had fairly large positive coefficients (4 to 6 percent of the respective means) but were not statistically significant. In this analysis, the introduction of PPS did not appear to alter the likelihood that persons would receive some (or no) Medicare-covered service during the last 90 days of life; the logit coefficients suggest a reduction in the fraction not using services, but the standard errors are large. The models (Table 7) show some important baseline differences between states where PPS was waived and states where it was implemented; the coefficient for the waivered state dummy captures these differences. Hospital admission rates were similar, but after adjustments, states where PPS was waived had more days of hospital care and offered a greater likelihood of death in a hospital. These states also had lower baseline levels of reimbursement for skilled nursing facilities and higher levels of reimbursement for care in a physician's office. This pattern is consistent with other studies showing longer lengths of stay and higher inpatient mortality in New York and New Jersey, where shortages of nursing home beds are pervasive (Gaumer et al. 1987). Models also show that the availability of health services has an important influence on use and spending in the last 90 days of life. In the hospital death and admission rate models there are strong supply influences. Hospital bed availability increases both the likelihood of admission, and the likelihood of death occurring in the hospital. The signs on measures of physician availability and nursing home bed availability suggest substitution for hospital care, showing that higher levels of resources are associated with a reduced likelihood of admission and less chance of death occurring in the hospital. The availability of hospital beds tended to be positively associated with days of care (as found by Ginsburg and Koretz 1983), but negatively associated with most reimbursement measures. This would sug-
740
HSR: Health Services Research 26:6 (February 1992)
gest the substitution between hospital days and SNF care, home care, physicians' services, and other services. Interestingly, inpatient payments were also lower when more beds were available, suggesting competitive influences rather than supply inducement. More physicians per capita, on the other hand, were associated with lower admission rates, fewer days of care, lower in-hospital death rates, and higher levels of reimbursement for every category studied, including physician payments. This suggests substitution against hospitals but the absence of competition in medical markets. Age was significant in all of the regressions except the hospital admission rate model. Although the effects of increased age, both in lowering the probability of hospital admission and death in the hospital and in reducing the number of inpatient days, were small, the estimates in reimbursement models were not. Older beneficiaries, holding other variables constant, received less inpatient, Part B, and home care.
DISCUSSION The most important finding here is that, for the first time in Medicare's history, beneficiaries are likely to die somewhere other than a hospital. Our results indicate that PPS has quickened the downward trend in the fraction of Medicare beneficiaries who die in the hospital, mainly through effects on the average length of stay. Although trends in the last 90 days of life indicated fewer days of inpatient care, general access to covered services and hospital admission rates did not decline. Indeed, it appears that PPS has simply led to more frequent discharge of dying patients to the home environment, with accompanying physician, DME, and home care services. These results are similar to but not as pronounced as those reported among terminally ill patients exposed to hospice programming (Greer, Mor, Morris, et al. 1986). The exception is that physician services appeared as a substitute for inpatient care in our sample, whereas Greer et al. found a complementary relationship between the two types of care among the terminally ill. These general associations between PPS and patterns of practice in the 90 days before death represent important alterations in the way Medicare benefits are being used in the final stages of life. The observed changes are consistent with general PPS incentives to reduce the amount of inpatient care delivered to beneficiaries, and to increase use of home- or SNF-based services, particularly to allow lengths of stay to be safely shortened. Yet the structure of Medicare payments for
Medicare in Last Ninety Days of Life
741
the last 90 days of life is relatively unchanged, still dominated by hospitals, which continue to receive about 75 percent of Medicare payments. Whatever substitutions are being made seem not to be materially altering the structure of payments or the continued importance of hospital payments in cost-control policymaking. We also note that the observed changes in the use of hospitals as the site of death have implications for program monitoring. The use of hospital discharge mortality (or even risk-adjusted hospital mortality) as a metric for quality would seem less useful in view of the significant trends in location of death. The trends we note in the place of death suggest that hospital performance studies should prefer death rates based on days following admission. Despite evidence of apparent substitution of nonhospital services, and no evidence of hampered access, we cannot conclude that the recent trends are leaving unchanged the quality of care delivered under Medicare's PPS. While the apparent patterns -of substituting posthospital care for shortened stays, and unchanged admission rates-are comforting, and while the entire pattern of trends is probably consistent with the hopes of policymakers, we cannot conclude that the health or satisfaction of beneficiaries are not affected by PPS.
NOTES 1. A recent econometric study by Schmitz (1989) finds significant changes in relative length of stay (LOS) trends in PPS and waiver states in 1983 and 1984, suggesting relative reductions in LOS under PPS in those years. 2. The fact that trends are more pronounced in states under PPS is a very important design consideration in the statistical models presented later in the article. In these models the specification of PPS effects captures any divergence in trend between PPS and waivered states, whether due to a break in trend for the PPS states or for the waivered states. These data suggest that the predominant temporal change is in the PPS states, lending support to the view that PPS (or something else unique to PPS states) may have been the source of measured differences in trend between the two groups of states. 3. A set of important changes in the Medicare HHA benefit in 1981 led to widespread expansion of the industry and of use of services (Williams, Cella, and Gaumer 1984). The most important change was elimination of the requirement for prior hospitalization. 4. Since the group of persons using no services is probably dominated by instances of sudden onset of acute disease, the measure probably is an insensitive marker for changes in constraints on use. This set of persons also necessarily includes persons who may have used services but did not submit bills for reasons of the deductible or other considerations.
742
HSR: Health Services Research 26:6 (February 1992)
REFERENCES Garfinkel, S., G. Riley, and V. Iannacchione. "High-Cost Users of Medical Care." Health Care Financing Review 9, no. 4 (Summer 1988): 41-52. Gaumer, G., E. Poggio, C. Collen, C. Sennett, and B. Schmitz. "Effects of State Prospective Reimbursement Programs on Patient Care." Medical Care 27, no. 7T(November 1987): 724-36. Ginsburg, P., and D. Koretz. "Bed Availability and Hospital Utilization: Estimates of the Roemer Effect." Health Care Financing Review 5, no. 1 (Fall 1983): 87-92. Gornick, M., and M. Hall. "Trends in Medicare Use of Post Hospital Care." Health Care Financing Review 1988 Annual Supplement (December 1988): 27-38. Greer, D. S., V. Mor, J. N. Morris, S. Sherwood, D. Kidder, and H. Birnhaum. "An Alternative in Terminal Care: Results of the National Hospice Study."Journal of Chronic Diseases 39, no 1 (1986): 9-26. Kidder, D., K. Merrell, and D. Dohan. Medicare Hospice Benefit Program Evaluation, Health Care Financing Grants and Contract Report. Baltimore, MD: HCFA, 1988. Lubitz, J., and R. Prihoda. "The Use and Costs of Medicare Services in the Last 2 Years of Life." Health Care Financing Review 5, no. 3 (Spring 1984): 117-31. McCall, N. "Utilization and Costs of Medicare Services by Beneficiaries in * Their Last Year of Life." Medical Care 22, no. 4 (April 1984): 329-42. Prospective Payment Assessment Commission. Technical Appendices to the Report and Recommendations to the Secretary. Washington, DC: DHHS, March 1988. Riley, G., J. Lubitz, R. Prihoda, and E. Rabey. "The Use and Costs of Medicare Services by Cause of Death." Inquiry 24, no. 3 (Fall 1987): 233-44. Riley, G., J. Lubitz, R. Prihoda, and M. Stevenson. "Changes in the Distribution of Medicare Expenditures among Aged Enrollees, 1969-1982." Health Care Financing Review 7, no. 3 (Spring 1986): 53-63. Schmitz, R. Effects of PPS on Per Capita Medicare Utilization. Cambridge, MA: Abt Associates Inc., February 1989. Williams, J., M. Cella, and G. Gaumer. Home Health Services: An Industry in Transition. Cambridge, MA: Abt Associates Inc., February 1984.
