Using Days Per Discharge to Measure the Profitability of Medicare Hospice Patients
When it comes to measuring profitability of Medicare hospice patients, the days per discharge is an especially important metric. Considering most hospices get paid for their patients based on a daily rate, the longer patients stay on hospice service, the more profitable they are. Additionally, upfront and back-end costs associated with each patient are spread over greater reimbursement as the patient’s length of stay (days per discharge measure) increases.
New Medicare Benefit Recommendations May Affect Hospice Profitability
Earlier this year, the Medical Payment Advisory Commission (MedPAC) made a number of recommendations in their report to Congress concerning the hospice benefit, including lowering the reimbursement for patients as their length of stay increases. If the hospice reimbursement policy moves in this direction, geographies with longer lengths of stays, as measured by days per discharge, may be more vulnerable to shifts in profitability.
By analyzing the 2007 Medicare claims data on a state-by-state basis, we can conclude the following:
- The national weighted average days per discharge is 83.1 days.
- There is a wide range in this metric among the individual states, with Connecticut having the lowest days per discharge (50.9) and Wyoming the highest (150.1).
- In looking at states on a quartile basis, the days per discharge measure for states in the lowest quartile is 64.5, compared to 113.6 days per discharge for states in the highest quartile—a 76% difference.
A Correlation Found Between Days Per Discharge and Hospice Utilization
In addition, Healthcare Market Resources research on 2006 Medicare claims data also showed a 60% correlation between longer lengths of stay and hospice utilization. In other words, states with longer lengths of stay also had higher levels of hospice utilization. This relationship may be part of a larger concept—the product life cycle of the hospice service. Increased utilization reflects greater levels of market maturity. We know from our research that there is an 80% correlation between the percentage of non-cancer deaths on hospice and hospice utilization. Since non-cancer patients are likely to have longer lengths of stay (days per discharge), it seems that more non-cancer patients generate increased utilization, with the side effect being greater days per discharge.
Click here or call 215-657-7373 to learn more about the days per discharge metric for hospice patients, as well as ways to use Healthcare Market Resources information to determine the best ways to improve your agency’s profitability.