Does ownership of HHAs affect hospital stays?

A new OIG report is raising more unpleasant questions about the relationship between hospitals and home health agencies. The puzzling report (OEI-02-94-00321) found that whether a hospital owns any HHAs affects how long patients stay at the hospital. In addition, DRGs also affect the length of hospital stays before patients are discharged to an HHA.

But curiously, the study found that it made no difference whether the hospital discharges the patient to an HHA that it owns. According to OIG, hospitals that own an HHA have an average length of stay of six days for all patients. Patients discharged to the hospital’s own HHA average 6.1 days in acute care. Hospitals that don’t own any HHAs have an average stay of seven days for all patients.

"This just muddies the waters," says AHA policy analyst Deborah Williams. OIG found no smoking gun which proves the government’s suspicion that hospitals are "double-dipping," Williams adds. That’s the practice where hospitals are paid for an inpatient stay that’s cut short, with the patient then transferred to an HHA that the hospital owns and for which it will receive a second payment.

Further adding to the puzzle is that OIG found a relationship between hospital stays and DRG. "Patients who had bowel procedures (DRG 148), joint replacements (DRG 209) and chronic obstructive pulmonary disease (DRG 88) and were discharged to a HHA from a hospital that owned one had shorter hospital stays," OIG says. "The differences were four days for bowel procedures and one day for joint replacement and pulmonary disease. Yet no differences were found for heart failure and shock (DRG 127), vascular procedures (DRG 478) and heart procedures (DRGs 105, 106 and 107). We might hypothesize that patients in these DRGs are less likely to be safely discharged early than patients in the other DRGs," the study notes.

Not coincidentally, the findings come as HCFA prepares to overhaul its prospective payment system (PPS) formula for some DRGs that involve the early discharge of patients to post-hospital settings, such as home health agencies. These cases will be treated as transfers rather than discharges, which means hospitals will receive less reimbursement for inpatient stays. Yet the study "does not lead me to any conclusions regarding policy changes," says Williams.

OIG, on the other hand, says its study buttresses data collected by other agencies. "According to the Prospective Payment Commission, the average length of a hospital stay for Medicare patients fell 13% between 1991 and 1994," notes the report. "During a similar period, the Commission found that the share of Medicare facility payments going to post-hospital care providers increased 15.5%."

OIG also cites a Prospective Payment Assessment Commission analysis that found that patients discharged "from hospitals with a skilled nursing facility (SNF) were 24% more likely to use a SNF than patients whose hospitalization was in a facility without a SNF."

Yet HCFA rejects OIG’s recommendation that hospital ownership plays a role when the agency determines which DRGs will be included in the new transfer reimbursement system.

"HCFA agrees that they should continue to monitor the data to understand the effect of hospital ownership on post-acute patient referral patterns, but they are not prepared to use hospital ownership as a factor when selecting DRGs to be covered under the new transfer provision," says OIG. "We agree that hospital ownership is only one variable among others that HCFA should continue to monitor to better understand the effect of hospital ownership on post-acute referral patterns."