Dual Enrollees Experience Higher Levels of Spending

Patients dually enrolled in Medicare and Medicaid have higher levels of Medicare spending compared to other beneficiaries, and it can impact hospitals' performance on a Medicare cost measure, according to a study published in Health Affairs.

In 2015, Medicare shifted its payment plan to be based on quality through the Hospital Value-Based Purchasing (VBP) Program, a mandatory national hospital pay-for-performance program. The Medicare Spending Per Beneficiary (MSPB) measure compares a hospital’s adjusted average cost for episodes of care to the national median. This is used to calculate the VBP Efficiency domain for individual hospitals. Unfortunately, the MSPB measure does not consider beneficiaries who are dually enrolled in Medicare and Medicaid, who account for 31% of total Medicare spending. Dually enrolled beneficiaries are also more likely to be admitted into safety-net hospitals with a high disproportionate share hospital index.

The study examined whether dual enrollees have higher spending on the MSPB measure and if so, which clinical conditions or care settings create that difference. Patient-level differences in episode spending were also analyzed to recognize the impact the MSPB measure has on the VBP overall performance scores for safety-net hospitals.

The researchers examined admissions for Medicare fee-for-service beneficiaries from May 2013 to December 2013 by following published methods that were used to create the MSPB measure. Each episode recorded includes all Medicare Parts A and B payments acquired from 3 days before admission through 30 days after hospital discharge. Once total payments were calculated, they were compared to the total expected payments relative to the episode based on CMS’ Hierarchical Condition Categories model. This model is adjusted for age, comorbidities, end-stage renal disease, and long-term institutional care, among other factors. The ratio of actual to expected payments was multiplied by the national average to calculate the MSPB measure for that hospital.

The results showed that of the 3.6 million hospital episodes in 2013 eligible for the MSPB measure, 32.5% were dually enrolled beneficiaries. Dual enrollees experienced 4.3% higher levels of spending compared to regular beneficiaries and had higher spending in 23 out of the 26 Major Diagnostic Categories. They were also more likely to use care 3 days before hospital admission and use institutional care. Safety-net hospitals had a higher proportion of patients who were dually enrolled, with most of these hospitals located in the South. Ultimately, higher MSPB scores translated into low efficiency VBP scores for safety-net hospitals.

“Dually enrolled beneficiaries were more costly under an episode-based measure of Medicare spending, due to higher utilization and spending in the postacute setting,” the authors concluded. “CMS could explore adjusting the Medicare Spending per Beneficiary measure for dual-enrollment status or functional status to potentially improve the accuracy of measures for high-risk populations.”