Episode-based Payment for the Medicare Outpatient Therapy Benefit

Publication date: Available online 5 April 2016
Source:Archives of Physical Medicine and Rehabilitation
Author(s): Peter Amico, Gregory C. Pope, Ann Meadow, Pamela West
ObjectiveTo conduct an analysis of Medicare outpatient therapy episodes of care and associated payment implications.DesignRetrospective observational design using Medicare claims data. To descriptively analyze the composition of outpatient therapy episodes, we explore both variable and fixed length episodes. The variable-length episode definition organizes services into episodes based on the time pattern of therapy service utilization, using 60-day clean periods. We also examine fixed length episodes, beginning with the first therapy utilization in CY 2010 and extending 30, 60 and 90 days.SettingThe study is focused on community dwelling users of outpatient therapy.ParticipantsThe sample includes all Medicare patients who used outpatient therapy beginning at any point in 2010.InterventionsNot applicableMain OutcomeMeasures Mean episode payments and episode lengths in calendar days.ResultsVariable length outpatient therapy episodes have a mean payment of $881. On average, outpatient therapy episodes last 43 calendar days. Mean therapy duration for the 30, 60 and 90 day fixed-length episode is 20, 31 and 38 calendar days. The 30, 60 and 90 day fixed length initial episodes account for 40, 55 and 63 percent of total Medicare payments. Simulations of episode based payment illustrate the difficulty of avoiding a large number of substantial underpayments, due to the right-skewed distribution of total actual payments.ConclusionsA strength of episode payment is reducing cost and potentially wasteful variation within episodes. Given the substantial variation in therapy episode expenditures, absent improvements in available data and in predictive information, pure lump sum episode payment would result in substantial revenue changes for many episodes. Additional data is needed to better explain the wide variation in episode expenditures.



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