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Medicare payment reform and provider entry and exit in the post-acute care market.

ABSTRACT: To understand the impacts of Medicare payment reform on the entry and exit of post-acute providers.Medicare Provider of Services data, Cost Reports, and Census data from 1991 through 2010.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.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.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.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.

SUBMITTER: Huckfeldt PJ

PROVIDER: S-EPMC3796101 | biostudies-literature | 2013 Oct

REPOSITORIES: biostudies-literature

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Medicare payment reform and provider entry and exit in the post-acute care market.

Huckfeldt Peter J PJ Sood Neeraj N Romley John A JA Malchiodi Alessandro A Escarce José J JJ

Health services research 20130405 5

<h4>Objective</h4>To understand the impacts of Medicare payment reform on the entry and exit of post-acute providers.<h4>Data sources</h4>Medicare Provider of Services data, Cost Reports, and Census data from 1991 through 2010.<h4>Study design</h4>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-ba ...[more]

PMID: 23557215

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Project description:ImportanceThe dialysis industry is highly concentrated, with large dialysis organizations now providing dialysis for more than 85% of patients with kidney failure in the United States. In 2011, Medicare introduced a new Prospective Payment System (PPS) for end-stage kidney disease, which bundled payment for dialysis care into 1 payment per patient. Trends in dialysis facility consolidation after the PPS went into effect are unknown.ObjectiveTo determine whether the introduction of the PPS in 2011 was associated with an acceleration in acquisitions and closures of small dialysis chains (<20 facilities) and independently owned facilities.Design setting and participantsThis retrospective cohort study included all Medicare-certified independent or small chain-affiliated dialysis facilities in the continental US between 2006 and 2016. Data were obtained from Medicare and the US Renal Data System and were analyzed in 2020.ExposuresThe PPS.Main outcomes and measuresDiscrete time hazard models were used to estimate the odds of acquisition and closure before the PPS (2006-2010) vs after the PPS (2011-2016). Analyses controlled for facility, market, and regional demographic characteristics. The average predicted marginal probabilities of acquisition and closure over time were estimated.ResultsThe proportion of small chain-affiliated and independently owned facilities declined from 29% (1383 of 4750 facilities) in 2006 to 15% (1038 of 6738) in 2016. Among 13 481 facility-years, 6352 (47%) were for profit, and mean (SD) census was 68 (59) patients. Overall, 3286 (24%) facilities opened during the observation period. The proportion of acquisitions that occurred each year varied from 1.1% (12 of 1065 facilities in 2015) to 7.2% (86 of 1192 facilities in 2012), while closures varied from 0.8% (9 of 1065 facilities in 2015) to 2.2% (28 of 1286 facilities in 2010), making both fairly rare. There was a 3.48 higher odds of acquisition in the post-PPS period compared with the pre-PPS period (95% CI, 1.62-7.47; P = .001). The odds of closure before and after the PPS were not statistically significantly different (odds ratio, 2.03; 95% CI, 0.61-6.73; P = .25). Facilities that opened during the observation period had a 7.2% higher predicted probability of acquisition compared with older facilities (95% CI, 5.4%-9.0%; P < .001).Conclusions and relevanceIn this cohort study of continental US Medicare-certified dialysis facilities, small-chain and independently owned facilities retained a declining share of the dialysis market. Further research should evaluate the effect of continued dialysis market consolidation on patient access, health care utilization, and clinical outcomes.

Dataset Information

Medicare payment reform and provider entry and exit in the post-acute care market.

Publications

Medicare payment reform and provider entry and exit in the post-acute care market.

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