An analysis of Act 92: how inpatient admission versus observation status affects cost of care and health outcomesCarey, Kelly (2017) An analysis of Act 92: how inpatient admission versus observation status affects cost of care and health outcomes. Master Essay, University of Pittsburgh.
AbstractBackground/Objective: Dual-eligible Medicare-Medicaid beneficiaries account for a disproportionate average cost per person for both Medicare and Medicaid – twice the cost compared to any other Medical Assistance recipients. In Pennsylvania, there are over 350,000 dual-eligible beneficiaries. Pennsylvania enacted Act 92 in 2016, creating set fees for observation services in acute care hospitals, aimed at controlling hospitalization costs. The overall objective of this study was to examine the effect of Act 92 on hospitalization costs of dual Medicare-Medicaid beneficiaries. Methods: The study population consisted of Gateway Health members who reported to the hospital with a claims data diagnosis code of ‘chronic obstructive pulmonary disease and bronchiectasis’ or ‘nonspecific chest pain’ between July 1, 2015-January 28, 2016 (prior to Act 92) and between July 1, 2016-January 28, 2017 (after Act 92). Linear regression models assessed the significance of the association between time period and index hospitalization costs, and logistic regression models were used to evaluate the association of time period with the probability of inpatient admission. Results: Non-parametric Wilcoxon test had a significant difference in mean index payments between beneficiaries hospitalized prior to Act 92 compared to after Act 92 (p<0.0001). Generalized linear regression model results showed reporting to the hospital prior to Act 92 compared to after did not have a statistically significant association with cost of hospitalization (β=255.09, p=0.2003) when adjusting for covariates. After adjusting for covariates, a logistic regression model showed reporting to the hospital after Act 92 was associated with a statistically significant reduction in inpatient admission (OR=0.672, P=0.0472). Conclusion: Act 92 had no direct impact on total cost of an index hospitalization, but reporting to the hospital after the enactment of Act 92 was associated with a statistically significant decrease in likelihood of being admitted as an inpatient compared to before Act 92. This topic is worth further studies with larger populations, more diagnosis codes, and longer follow-up times for readmission. The public health significance of Act 92 is reduced spending for health insurance companies, which can trickle-down to reduce burdensome healthcare costs for observation hospital stays for special needs population of beneficiaries. Share
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