Developing payment refinements and reforms under Medicare for excluded hospitals

Health Care Financing Review,  Spring, 1989  by John C. Langenbrunner,  Patricia Willis,  Stephen F. Jencks,  Allen Dobson,  Lisa Iezzoni

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Patients treated in the four classes of excluded facilities typically fall into one of two broad categories:

Those with acute or well defined treatment needs.

Those with more long-term treatment requirements, reflecting (generally) more chronic care needs.

What differs across these four facility types are, of course, the clinical reasons for admission as well as the mix of acute and long-term treatment needs.

Diagnosis and treatment of acute diseases and conditions are most common in children's hospitals. The process of pediatric hospital care for many patients is, in fact, probably closer to the paradigm of acute care than that of the other three excluded hospital types. Often the clinical goal is to minimize the length of stay in order to reduce the stress of separation from parents. The purpose of typical pediatric hospitalizations is also the same as for acute care: to diagnose disease and then treat it. Thus, services rendered in both settings often involve a heavy emphasis on physician care and reliance on diagnostic and therapeutic technologies (Payne and Restuccia, 1987).

In rehabilitation hospitals, stays are often longer and care usually emphasizes the treatment of functional limitations and disability, not pathology and impairment. The end point of an admission may not be a specific clinical event so much as the consensus of a multidisciplinary provider team that treatment goals have been optimally achieved. Still, a high percentage of patients-especially Medicare patients-enter a rehabilitation facility with a confirmed diagnosis. Conditions such as stroke, hip fracture, and arthritis can often be treated in relatively short, well defined periods of time. Similarly, acute episodic psychiatric care is frequently found in distinct-part psychiatric units in general community hospitals. The type of patient and type of care appear to correlate highly with the treatment setting in psychiatric care. What makes this excluded class more problematic, however, is the unknown degree-perhaps more so than in other areas of medical care-to which differences in treatment approaches reflect true patient needs or merely different styles of medical practice.

At the same time, these four classes of hospitals frequently share a common characteristic: Their patients need either intermittent care over long periods of time or continuous care as a result of disability. Examples of such patients range from pediatric patients with severe cogenital diseases, to the mentally disabled in psychiatric hospitals, to respirator-dependent patients in long-term hospitals.

About 10 percent of psychiatric admissions for Medicare beneficiaries are for patients under 65 years of age who are eligible because of permanent disability. The majority of this group is presumably composed of individuals who may reasonably be described as chronically mentally ill. In addition, it appears likely that 5-10 percent of psychiatric care use by those 65 years of age or over is by individuals who became permanently disabled before 65. Patients in both of these groups probably qualify as chronically mentally ill.