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Column | Medicare Compliance RAC OIG

Deceased Medicare Beneficiary Admissions: Accounting for the Causes and Impacts

Column | Medicare Compliance RAC OIG

Deceased Medicare Beneficiary Admissions: Accounting for the Causes and Impacts

Hospitals and health systems should be prepared to see a greater financial impact from Medicare hospital admissions that end with beneficiaries being deceased than from such admissions that end with the patients leaving the hospital in an improved condition. 

Just over 3 percent of Medicare admissions end with the death of the patient. This finding is based on data from fiscal years 2015 through 2017 reported in the Medicare Provider Analysis and Review (MedPAR) file. As would be expected, the time and resources required to treat a beneficiary who is near death and ultimately dies are far greater than what is required for beneficiaries who leave the hospital after treatment. Charges and associated costs are nearly double those of a typical Medicare admission, while the amount paid is slightly lower as a percentage of either charges or costs than for a typical admission. For the review period, a hospital could expect to receive payments covering a decreasing percentage of costs for admissions in which beneficiaries are deceased to the current level of 89.5 percent, or $23,263 in payments to cover $26,208 in costs.

A more detailed review, not shown here, of deceased beneficiary admissions disclosed that a group of diagnosis codes and conditions are responsible for the nearly a third of all fatalities seen over the three years. Among these conditions, two respiratory-related groupings show the most financial stress, with average loss per admission topping $3,000 for admissions where the primary diagnosis is categorized as “shortness of breath” or pneumonia (ICD-10-CM codes R06.02 and J18.9, respectively).

Analysis: Total Medicare Short-Term, Acute Care Hospital Admissions Compare with Such Admissions Resulting in Beneficiaries’ Deaths 

For 2017, the most current Medicare year, these two conditions accounted for more than 33,000 deaths, with the average charge exceeding $100,000 and costs exceeding payments by more than $3,000. The trend is worsening: From 2015 through 2017, the average loss per episode increased by more than 80 percent for both groupings. Based on the relatively high number of admissions associated with these conditions and outcomes, hospitals can expect to see a continuing financial impact as they treat these difficult admissions and their costs continue to outpace Medicare payments.

The MedPAR file, compiled and made available for purchase by the Centers for Medicare & Medicaid Services (CMS), represents every inpatient hospital admission processed for Medicare beneficiaries in the nation, and it contains a number of data elements that can provide hospitals with in-depth and meaningful indicators relating to utilization, length of stay, diagnosis, and procedure use and assignment, as well as financial performance indicators. This analysis is based on the three most recent years of CMS releases, FY15-17.

A primary benefit of this data set is the inclusion of charge indicators from which charges per admission can be broken out by discharge type. By mapping the MedPAR data to Hospital Cost Reports provided directly by hospitals to CMS, it is possible to calculate a ratio-of-cost-to-charges figure that provides an accurate account of hospital costs at the discharge level. This allows for an “outcomes”-based analysis of each hospital and discharge destination as defined by CMS.

This analysis was provided by Optum Payer Solutions consulting. For more information, please contact Jan Welsh.

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