In this study, mean Medicare payments for care of acute infection in nursing home residents were $5,202 and $996 with hospital and nursing home triage, respectively, for a per case difference of $4,206 in 1997 dollars. Inflated to December 2006 dollars using the Consumer Price Index Medical Care subindex,27
the per-case difference was $6,033. The smallest per-case difference that was observed in sensitivity analyses was $3,393 (in 1997 dollars; $4,867 in 2006 dollars). Therefore, interventions designed to substitute nursing home triage for hospital triage that cost less than $4,867 per case are likely to be cost saving to Medicare. For example, in the Evercare model, a nurse practitioner that provided “intensive service” for acutely ill nursing home residents reduced hospital use by 24.7 hospital admissions per 85 patients per year (the average nurse practitioner caseload).7
This model would reduce annual Medicare payments by between $120,214 and $149,015 and, with annual nurse practitioner salary and benefits of approximately $100,000 in 2006, would likely result in overall savings. In contrast, a hospice eligibility assessment intervention for nursing home residents that reduced 6-month hospital use by 21 hospital admissions per 100 patients did this by increasing Medicare hospice enrollment. The higher Medicare hospice payments, which were estimated to be $213,720 (1,644 more Medicare hospice days at $130/day),28
would exceed the lower 6-month Medicare payments of between $102,207 and $126,693 associated with this intervention.
The observed Medicare payment difference between hospital and nursing home triage for nursing home residents with infection exceeded cost differences estimated in other studies. This study's hospital:nursing home triage payment ratio of 6.07 per case was higher than that estimated in a study of care for pneumonia in which patients hospitalized within 24 hours of evaluation had 2.75 times higher costs than those who were not ($10,408 per case for initial hospital treatment vs $3,789 for initial nursing home treatment),3
although that study included nursing home custodial care costs, which were not included in the current study. Similarly, a study in Ontario in which a study nurse triaged nursing home residents with lower respiratory infection to nursing home or hospital care based on clinical pathway criteria reduced absolute hospitalization rates 12%, with overall estimated U.S. cost savings of $1,517 per case in the intervention group and a hospital:nursing home triage cost ratio of 1.86.5
Finally, a study of nursing home residents in New York State between 1999 and 2004 found average hospitalization costs of $11,252, $9,354, and $9,067 for pneumonia, kidney or urinary tract infection, and cellulitis, respectively, although costs were estimated from hospital charges, and there was no estimate of nursing home costs, prohibiting an estimate of cost savings.29
A strength of the current study is that it takes a payer's perspective and uses payment data obtained from Medicare. The societal perspective may miss the fact that reducing hospital use is not necessarily financially beneficial to nursing homes, hospitals, or other providers when reimbursed by fee-for-service Medicare or other insurance. For nursing homes, acute illness care places temporary increased burden on nursing staff, a burden that payers might not compensate. For hospitals, reducing hospital use by nursing home residents may reduce revenue unless higher-revenue patients continually and fully occupy the hospital. Thus, of stakeholders, payers such as Medicare that are at risk for paying for hospital care have the strongest incentive to sponsor programs to reduce hospital use, providing rationale for a cost comparison of hospital versus nursing home triage from the payer's perspective.
An important limitation of this study is that patients in the hospital triage group probably had slightly more-severe infections on average than patients in the nursing home triage group, even with propensity matching. Unmeasured factors that may have contributed to this imbalance include blood pressure; heart rate; respiratory rate; mental status; and hematology, chemistry, and microbiology laboratory parameters. As a result, this analytical approach is not meant to suggest that all observed hospital triage was inappropriate or that all hospitalized patients could have been managed in the nursing home under circumstances existing at that time. Nevertheless, the approach identifies nursing home triage patients who were similar to hospital triage patients, suggesting that nursing home management might have been feasible. In addition, other studies have found that 40% of hospital admissions from nursing homes may be rated as inappropriate30
and that, in nursing home residents in New York State, 29% of hospitalizations in 2004 were for “ambulatory care sensitive conditions” (i.e., might have been prevented with higher-quality care in the nursing home), of which the top two diagnoses, making up 51% of ambulatory-care-sensitive hospitalizations, were pneumonia and urinary tract infection.29
A second important limitation is the possibility that findings from clinical and payment data from 1992 to 1997 may not be applicable to current providers and payers. With regard to trends in clinical characteristics of nursing home residents, it has been suggested that nursing home residents now have greater levels of illness burden and severity.31
In this regard, it is worth noting that the analytical sample excluded nursing home triage cases that were of low severity and could not be matched to a hospital triage case; only those cases that were of a similar severity to hospitalized cases (the more severe) were included. Consequently, it is likely that the analytical cases had a level of severity and poor health that exists in nursing homes today. Nevertheless, these methods resulted in only a fraction of the available data being used.
Two significant changes have occurred in Medicare payment since the study period. The first was the introduction of the prospective payment system for nursing home provision of skilled nursing services (e.g., rehabilitation) in 1998. However, payments for Medicare skilled nursing days made up a small fraction of the total infection payment amounts, which remains likely to be true today (). The second change was the implementation of Medicare coverage for prescription drugs in the nursing home (Medicare Part D). To address this, infection-related nursing home Medicaid drug expenditures of 185 matched pairs of dually eligible (Medicaid and Medicare) study participants were examined, and only a small difference was found between triage groups in this category ($124 and $171 in nursing home and hospital triage groups, respectively).
A previous report using this sample suggests that clinical outcomes (mortality and pressure ulcer rates) are equal or better with nursing home triage for selected nursing home residents with infection.4
Other studies suggest that nursing home residents with pneumonia have equal or better outcomes with nursing home triage.1–3,5
Patients transferred to the hospital are exposed to greater risk of iatrogenic harm as a result of care handoffs32
and a more-invasive approach in the hospital.33
An observational design limits each of these studies, and worse illness severity in the hospitalized group might confound the findings.
In conclusion, Medicare expenditures for managing infections in nursing home residents may be reduced with interventions that enable providers to manage these conditions safely and effectively in the nursing home in residents who would otherwise be transferred to an acute hospital. If interventions to reduce hospital triage involved increasing nurse or other staffing in the nursing home9,10
—staffing that has decreased since Medicare implemented prospective payment34
—the potential exists that residents would benefit from the improved staffing even when not acutely ill. Furthermore, interventions that increase attention to patients’ do-not-hospitalize preferences or increase patients’ access to palliative, hospice, and end-of-life care11
would address a pressing need of modern nursing facilities, which are increasingly recognized as an important site for end-of-life care. This study's comparison is also important in light of Medicare's new nursing home pay-for-performance demonstration, in which the financial incentive pool is generated from Medicare savings from reduced hospital use.8
The challenges of creating sensible management programs and better quality of care depend partly on creating rational financial incentives; whether pay-for-performance fulfills this need is currently an open question.35