Hospitals routinely monitor Medicare and Medicaid day utilization percentages (Medicare and Medicaid days divided by total days) as an integral part of budgeting, planning, and measuring financial performance. Measuring trends in these percentages helps hospitals in many ways, from predicting net revenues and resource needs to planning services and market analysis. The levels of Medicare and Medicaid day utilizations are also a measure of hospital reliance on Medicare and Medicaid payments. Changes in day utilization percentages can be influenced by any number of changes in the hospital's overall patient population.
An analysis of Medicare cost report data discloses that, nationally, Medicare and Medicaid day utilization percentages have trended downward for the past five years (FY06-FY10).
The Medicare day utilization percentage for all hospitals studied decreased from 40.2 percent in FY06 to 35.8 percent in FY10, a decrease of 10.9 percent. The Medicaid day utilization percentage for all hospitals decreased from 14.5 percent in FY06 to 13.9 percent in FY10, a decrease of 3.6 percent. The total Medicare and Medicaid day utilization percentage decreased from 54.6 percent in FY06 to 49.7 percent in FY10, an overall decrease of 9.0 percent. This overall decline could indicate that Medicare and Medicaid patients have been shifting from inpatient to outpatient settings more quickly than patients covered by other payers. It could also indicate that hospitals have successfully attracted more inpatients with private insurance or other payment sources, thereby driving the Medicare and Medicaid percentages down. Or it could indicate that an increase in the population of indigent and private-pay patients could be driving the Medicare and Medicaid percentages down. There could be many other explanations, and any single hospital could be affected by any combination of these factors.
The 10.9 percent overall decrease in the Medicare day utilization percentages during the five-year study period was driven mainly by decreases of 12.1 percent and 9.2 percent experienced by short-term and critical access hospitals, respectively. More than 80 percent of the hospitals studied fell into those two categories. Although all hospital types show a downward trend, it is interesting to note that critical access, rehabilitation, and long-term acute care hospitals all had much higher Medicare day utilization percentages than short-term acute care hospitals. It is also interesting to note that psychiatric hospitals had the lowest Medicare day utilization percentages but were the only type to experience an increase (7.7 percent) during the study period.
Exhibits 2 & 3
Again, the 3.6 percent overall decrease in the Medicaid day utilization percentages during the study period was driven mainly by decreases of 2.5 percent and 3.8 percent experienced by short-term and critical access hospitals, respectively. However, it is interesting to note that critical access hospitals had much lower Medicaid day utilization percentages than short-term hospitals. Long-term acute hospitals had the highest percentages, but experienced the largest decrease (14.1 percent) during the study period. Similarly, psychiatric hospitals experienced an 11.7 percent decrease in Medicaid day utilization percentages during the study period. Interestingly, rehabilitation hospitals had the lowest Medicaid day utilization percentages, but experienced an 8.4 percent increase over the study period.
Hospitals should compare their trends with the national trends and seek to understand reasons for differences and similarities, and to identify factors causing changes from year to year.
This analysis is based on Medicare cost report data in the CMS Healthcare Cost Report Information System file as of June 30, 2011. Medicare and Medicaid day utilization percentages were computed for all hospitals for the five-year period, FY06-FY10. Data and computations were assigned to each federal fiscal year based on the cost report end date.
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Publication Date: Thursday, December 01, 2011