Department  of  Health  and  Human  Services 
OFFICE  OF 
INSPECTOR  GENERAL 
MEDICARE  HOSPITAL 

DISCHARGE  PLANNING 

JUNE  GIBBS  BROWN 
Inspector  General 
DECEMBER  1997 
OEI-02-94-00320  OFFICE  OF  INSPECTOR  GENERAL 
The  mission  of  the  Office  of  Inspector  General  (OIG),  as mandated  by  Public  Law 
95-452,  is to protect  the  integrity  of  the  Department  of  Health  and  Human  Services 
programs  as well  as the  health  and  welfare  of beneficiaries  served  by  them.  This  statutory 
mission  is carried  out  through  a nationwide  program  of  audits,  investigations,  inspections, 
sanctions,  and  fraud  alerts.  The  Inspector  General  informs  the  Secretary  of program  and 
management  problems  and  recommends  legislative,  regulatory,  and  operational  approaches 
to correct  them. 
Office  of Evaluation  and  Inspections 
The  Office  of  Evaluation  and  Inspections  (OEI)  is one  of  several  components  of the  Office 
of Inspector  General.  It conducts  short-term  management  and  program  evaluations  (called 
inspections)  that  focus  on  issues  of  concern  to the  Department,  the  Congress,  and  the 
public.  The  inspection  reports  provide  findings  and  recommendations  on  the  efficiency, 
vulnerability,  and  effectiveness  of  departmental  programs. 
The  OEIs  New  York  Regional  Office  prepared  this  report  under  the  direction  of John  I. 
Molnar,  Regional  Inspector  General.  Principal  OEI  staff  included: 
Region  Headquarters 
Renee  Dunn,  Project  Leader  Linda  Moscoe 

Ellen  Vinkey,  Lead  Analyst  Barbara  Tedesco 

Panayiotis  Beloyeannis,  Intern  Stuart  Wright 

Thomas  Bollyky 

Daniel  Ginsberg 

To  obtain  a copy  of  this  report,  call  the  New  York  Regional  Office  at 212-264-1998  or 
fax  a request  to 212-264-1026.  EXECUTIVE  SUMMARY 
PURPOSE 
To  determine  how  and  to  what  extent  hospital  ownership  of  home  health  agencies  or  nursing 
homes  impacts  hospital  discharge  planning  for  Medicare  beneficiaries. 
BACKGROUND 
Hospital  discharge  planning  is a process  where  a plan  is developed  for  a patient  to  receive 
appropriate  post-hospital  placement  and  services. 
A significant  reduction  in the  average  length  of  stay  for  acute  care  hospital  patients  created  a 
greater  need  for  post-hospital  services  such  as home  health  and  nursing  home  care.  These 
reductions  are  widely  believed  to be  associated  with  advances  in medical  technology  as well 
as the  implementation  of the  Medicare  prospective  payment  system.  As  the  average  hospital 
stay  decreases,  the  role  of the  hospital  discharge  planning  process  has  become  more  critical. 
This  study  focuses  on  discharge  planning  for  patients  who  are  referred  to  home  health 
agencies  or  nursing  homes  owned  by  their  discharging  hospitals.  We  based  our  results  on: 
utilization  data  for  the  hospital  and  post-hospital  stays  for  a stratified  random  sample  of 
Medicare  beneficiaries  who  had  been  discharged  from  a hospital  and  went  to  either  a home 
health  agency  or  a nursing  home;  mail  questionnaires  sent  these  Medicare  beneficiaries;  mail 
questionnaires  sent  to discharge  planners  from  the  beneficiaries  discharging  hospitals;  and  a 
review  of materials  related  to  the  discharge  planning  process  that  were  submitted  to us  by  the 
discharge  planners. 
FINDINGS 
Hospital ownership  seems to have little influence  on which nursing  homes patients are 
referred  to 
We  analyzed  the  discharge  process  experienced  by  beneficiaries  in our  sample  who  went  to a 
nursing  home.  Regardless  of  whether  the  nursing  home  was  owned  by  the  discharging 
hospital,  nursing  home  beneficiaries  report  having  input  in the  referral  process.  Only  13 
percent  of  them  say,  the hospital  just  told  me  where  to go.   Only  a quarter  of beneficiaries 
report  no  say  in the  decision  about  which  nursing  home  to choose.  Many  beneficiaries 
report  that  the  decision  to  go  to a particular  nursing  home  was  made  by  a relative.  Of 
nursing  home  patients  who  were  discharged  from  a hospital  that  owned  a nursing  home,  only 
40 percent  went  to  the  one  owned  by  the  discharging  hospital. 
However,  it does influence  the length  of stay in both the hospital and  the nursing  home 
There  has  been  concern  and  some  evidence  that  hospitals  which  own  nursing  homes 

discharge  patients  sooner  to  their  own  facilities  and  those  patients  stay  in the  facilities  longer. 

i  This  raises  the  question  of  whether  hospitals  are  lowering  their  costs  for  patients  for  whom 
they  are  receiving  a lump  sum  prospective  payment  from  Medicare  and  discharging  those 
same  patients  to post-hospital  services  for  which  they  are  being  paid  on  a cost  basis.  This 
cost  shifting  would  result  in  increased  Medicare  reimbursement  for  the  hospital. 
When  we  analyzed  relevant  data  for  beneficiaries  who  got  services  from  hospital-owned 
nursing  homes,  we  found  additional  evidence  supporting  this  concern.  We  found  a 
statistically  significant  difference  in the  length  of hospital  stays;  beneficiaries  discharged  to 
the  hospital-owned  nursing  homes  had  average  hospital  stays  of  6.8  days,  as compared  to  8.9 
days  for  those  beneficiaries  who  went  to  a nursing  home  independent  of  their  hospital.  In 
addition,  we  found  a statistically  significant  difference  in the  length  of  nursing  home  stays; 
beneficiaries  who  went  to  the  hospital  owned  nursing  home  averaged  a 37 day  nursing  home 
stay  while  those  who  went  to  a nursing  home  independent  of  their  hospital  averaged  a 29 day 
nursing  home  stay.  This  supports  the  concern  that  hospitals  are  shifting  patients  from  acute 
care,  reimbursed  under  a lump  sum  prospective  payment,  to post-acute  care  in nursing 
homes,  which  is reimbursed  on  a cost  basis,  thus  maximizing  Medicare  reimbursement. 
Hospital ownership  does seem to have influence  on which home  health  agencies  patients 
are referred  to 
Many  beneficiaries  report  not  having  full  choice  in  selecting  a home  health  agency. 

In  contrast  to  nursing  home  beneficiaries,  38 percent  of home  health  agency  beneficiaries 

who  went  to hospital-owned  agencies  report  that  the  hospital  just  sent  home  care  people  to 

them.    Again,  in contrast  to  nursing  home  beneficiaries,  focusing  only  on  home  health 

patients  who  were  discharged  from  a hospital  that  owned  a home  health  agency,  we  found 

that  fully  62 percent  of  them  went  to the  agency  owned  by  the  discharging  hospital. 

Discharge  planners  from  hospitals  which  own  home  health  agencies  report  that  hospital 

ownership  is a factor  in their  referral  process  to home  health  agencies:  19 percent  report 

that,  unless  patients  or  families  object,  they  refer  all patients  to  their  hospital-owned  agency 

and  almost  10 percent  believe  that  someone  from  the  hospital  puts  pressure  on  patients  to 

choose  a particular  home  health  agency.  Finally,  hospitals  owning  home  health  agencies  are 

more  likely  to  have  referral  procedures  than  those  which  do  not  own  agencies. 

Hospital ownership  also influences  the duration  of home  health  agency  services 
There  was  a statistically  significant  difference  with  regard  to  the  length  of  home  health 
agency  services;  those  beneficiaries  that  received  services  from  a home  health  agency  owned 
by  the  hospital  they  were  discharged  from  averaged  49  days  of  service  while  those  receiving 
care  from  a home  health  agency  independent  of  their  hospital  averaged  37 days  of  service. 
However,  no  statistically  significant  difference  in the  length  of  the  hospital  stay  was  found 
when  comparing  hospital  stays  for  beneficiaries  who  received  care  from  a home  health 
agency  owned  by  their  discharging  hospital  to  stays  for  those  beneficiaries  who  received  care 
from  an agency  independent  of their  discharging  hospital. 
ii  Beneficiaries  who go to hospital-owned  nursing  homes  and  home  health  agencies  report 
better continuity of care 
One  goal  of  the  discharge  planning  process  is to promote  a strong  connection  between  the 
care  provided  in the  hospital  and  the  care  given  by  the  home  health  agency  or  nursing  home. 
It is generally  assumed  that  if discussions  are  held  with  patients  regarding  their  post-hospital 
needs  and  how  they  can  be  addressed,  the  likelihood  that  these  needs  will  be  met  is 
improved.  It is also  assumed  that  the  earlier  discussions  are  held  and  the  more  comfortable 
beneficiaries  are  with  the  timing  of  their  hospital  discharge,  the  better  the  continuity  of their 
care  will  be. 
Beneficiaries  who  went  to  hospital-owned  home  health  agencies  are  more  likely  than  those 
who  got  independent  services  to  report:  having  been  discharged  at the  right  time  (89  versus 
77 percent);  knowing  what  healthcare  services  they  are  supposed  to get  after  leaving  the 
hospital  (92  versus  83 percent);  and,  that  the  connection  between  their  care  providers  was 
very  good  (88  versus  43 percent).  Those  who  went  to hospital-owned  nursing  homes  were 
more  likely  to  report:  having  been  talked  to  early;  having  been  talked  to  about  the  post-
hospital  services  they  thought  they  would  need  (95  versus  61 percent);  having  been 
discharged  at the  right  time;  and,  that  their  overall  health  improved  (77  versus  43 percent). 
Hospital ownership  does not impact beneficiaries  level of satisfaction 
Both  home  health  agency  and  nursing  home  beneficiaries  report  high  levels  of  satisfaction 
with  the  discharge  planning  process.  Their  satisfaction  does  not  differ  based  on  ownership. 
RECOMMENDATIONS 
Our  findings  suggest  that  hospital  ownership  of  nursing  homes  plays  a significant  role  with 
regard  to the  nursing  home  beneficiary  utilization  patterns.  The  hospital  stay  is shorter  and 
the  nursing  home  stay  longer  thus  the  hospital  may  be  shifting  cost  from  a prospective 
payment  system  to  a cost-based  system,  maximizing  Medicare  reimbursement.  Therefore, 
we  recommend  the  following: 
b 	 The  HCFA  should  develop  statistical  methods  to target  for  special  review  providers 
who  may  be maximizing  their  Medicare  reimbursement  in this  way.  The  records  of 
these  providers  should  be  reviewed  by  the  Peer  Review  Organizations,  as in the  past, 
or  through  some  other  suitable  mechanism.  Providers  who  are  found  to be 
inappropriately  discharging  beneficiaries  to their  own  nursing  homes  should  be  subject 
to payment  adjustments  and  appropriate  fines  or penalties. 
Our  findings  also  suggest  that  hospital  ownership  plays  a significant  role  in home  health 
agency  referral  discussions  and  some  role,  albeit  a lesser  one,  in nursing  home  referral 
discussions.  In  addition,  we  found  that  many  Medicare  beneficiaries  do  not  have  full  choice 
in selecting  a home  health  agency  or  nursing  home.  Therefore,  we  recommend  the 
following: 
. . . 
111  b 	 The  HCFA  should  assure  that  hospitals  disclose  ownership  of  home  health  agencies 
and  nursing  homes  in a systematic  way. 
 	 Hospitals  which  own  home  health  agencies  and  nursing  homes  should  be 
required  to  disclose  the  names  of  the  home  health  agencies  and  nursing  homes 
which  they  own  to  all beneficiaries  who  are  possible  candidates  for  these  post-
hospital  services. 
a 	 Hospitals  which  own  home  health  agencies  and  nursing  homes  should  be 
required  to disclose  this  information  to HCFA. 
b 	 The  HCFA  should  take  additional  measures  to  assure  that  when  beneficiaries  are 
being  discharged  from  the  hospital  they  are  given  a choice  in  selecting  a home  health 
agency  or  nursing  home  from  which  to receive  care. 
0 	 Hospitals  should  be  required  to  inform  patients  (or  their  families)  that  they  are 
free  to choose  among  home  health  agency  providers  and  nursing  homes.  This 
information  should  be  provided  as early  as possible. 
0 	 Hospitals  should  maintain  a file  of  Medicare  participating  home  health 
agencies  and  nursing  homes  in the  area  and  provide  beneficiaries  (or  their 
families)  with  a list  of  alternatives  which  are  appropriate  for  the  level  of care 
they  need. 
w 	 Since  our  findings  support  the  need  for  additional  Medicare  beneficiary  information 
related  to post-hospital  services  and  choice,  we  recommend  that  HCFA  prepare 
information  for  beneficiaries  addressing  this  issue  and  circulate  it widely. 
1997  BALANCED  BUDGET  ACT 
The  1997  Balanced  Budget  Act  includes  a provision  which  addresses  the  concern  that  some 
hospitals  are  shifting  costs  from  a prospective  payment  system  to  a cost-based  system,  thus 
maximizing  Medicare  reimbursement.  Section  4407  of  this  recently  enacted  law  redefines 
beneficiaries  with  certain  diagnoses  who  are  discharged  from  hospitals  to  nursing  homes  and 
home  health  agencies  (as well  as other  prospective  payment  exempt  settings)  as  transfers. 
This  law  limits  payments  to  hospitals  for  these  cases. 
This  recently  enacted  law  addresses  the  concern  disclosing  hospital  ownership  information 
and  Medicare  that  beneficiaries  are  informed  of  their  freedom  to choose  the  home  health 
agency  or  nursing  home  to  which  they  will  be  referred.  Section  4321  of  the  1997  Balance 
Budget  Act  requires  hospitals  referring  patients  to home  health  agencies  (HHA)  and  other 
post-hospital  providers  to: 
0 	 not  specify  or  otherwise  limit  beneficiaries  in terms  of  which  post-hospital  service 
provider  they  receive  services  from; 
iv  provide  beneficiaries  with  information  on  HHAs  and  other  post-hospital  providers 
which  serve  the  area; 
disclose  to  the  beneficiary  any  financial  interest  which  the  hospital  may  have  in an 
HHA  or  other  post-hospital  provider  to which  they  are  referred;  and, 
disclose  to  HCFA  the  nature  of  any  financial  interest  which  the  hospital  has  in a home 
health  agency  or  other  post-hospital  service  provider,  as well  as related  referral  rate 
information. 
The  HCFA  is in the  process  of  implementing  both  of these  new  provisions. 
COMMENTS 
We  received  comments  on  the  draft  report  from  the  Health  Care  Financing  Administration, 
the  Assistant  Secretary  for  Planning  and  Evaluation  (ASPE)  and  the  Assistant  Secretary  for 
Management  and  Budget.  They  generally  concur  with  our  recommendations.  The  actual 
comments  received  are  in Appendix  E. 
The  HCFA  stated  it hopes  to use  experience  gained  in implementing  the  new  transfer  policy 
authorized  by  the  Balanced  Budget  Act  to develop  techniques  that  can  be  applied  to a broader 
set of  DRGs.  The  HCFA  also  expressed  concern  that  the  publication  referenced  in a draft 
report  recommendation  does  not  target  the  intended  audience.  To  accommodate  this  concern 
we  have  modified  our  recommendation. 
The  ASPE  provided  suggestions  for  changes  in wording  and  clarifications  of  the  text  which 
we  have  for  the  most  part  incorporated  into  the  final  report.  They  suggest  that  the  report 
provide  additional  detail  to  the  discussion  about  Federal  requirements  for  discharge  planning 
and  the  referral  processes  used  by  hospitals  when  discharging  patients  to  nursing  homes  and 
home  health  agencies.  Specifically,  the  ASPE  recommended  including  a discussion  of  the 
criteria  used  by  hospitals  in selecting  the  post-acute  provider  type  to which  beneficiaries  were 
referred.  In  an effort  to better  understand  what  factors  are  considered  in making  these  post-
hospital  placement  decisions,  we  asked  discharge  planners  When  you  determine  that 
Medicare  patients  need  post-hospital  services,  how  do  you  decide  whether  they  need  home 
health  agency  services  or  they  need  to go  to a nursing  home?  Most  respondents  indicated 
that  the  following  criteria  were  among  the  factors  used  to make  this  determination:  the 
patientss  medical  needs,  the  degree  of  support  available  to the  patient  in their  home,  the 
preference  of  the  patient  and  family,  and  the  patients  ability  to  function  safely  at home.  No 
one  criterium  was  cited  as being  more  important  than  the  others. 
V  TABLE  OF  CONTENTS 
PAGE 

EXECUTIVE  SUMMARY 

INTRODUCTION  . .  . . . . . .  . . . s . . . .  . a ~ . . . . .  s . . . .  . . . . .  . . . . . . .  1 

FINDINGS  . . . . .  . . e . .  . . . . n  9 

.............................. 
Referrals  to  Nursing  Homes  .  . .  9 

.............................. 
Nursing  Home  and  Hospital  Stays  10 

.............................. 
Referrals  to  Home  Health  Agencies  11 

.............................. 
Home  Health  Agency  Stays  . . . .  14 

.............................. 
Continuity  of  Care  .........................................  15 

Beneficiary  Satisfaction  ......................................  16 

RECOMMENDATIONS  ....................................  17 

APPENDICES 

A:  Discharge  Planning  Checklist  ................................  A-l 

B:  Utilization  Data  ........................................  B-l 

C:  Chi-Square  Values  ......................................  C-l 
D:  Non-Respondent  Analysis  ..................................  D-l 
E:  Comments  ...........................................  E-l 
vi  INTRODUCTION 

PURPOSE 
To  determine  how  and  to  what  extent  hospital  ownership  of home  health  agencies  or  nursing 
homes  impacts  hospital  discharge  planning  for  Medicare  beneficiaries. 
BACKGROUND 
Post Hospital Care 
A significant  reduction  in the  average  length  of  stay  for  acute  care  hospital  patients  created  a 
greater  need  for  post-hospital  services  such  as home  health  and  nursing  home  care.  These 
reductions  are  widely  believed  to be  associated  with  medical  technology  advances  as well  as 
the  implementation  of  the  Medicare  prospective  payment  system.  As  the  average  hospital 
stay  decreases,  the  role  of  the  hospital  discharge  planning  process  has  become  more  critical. 
Rapid  growth  of managed  care  organizations,  with  their  emphasis  on  cost  containment  and 
efficiency,  has  also  promoted  discharging  patients  from  hospitals  as quickly  as possible,  and 
arranging  for  lower  cost  post-acute  services. 
According  to  the  Prospective  Payment  Assessment  Commission,  the  average  length  of  a 
hospital  stay  for  Medicare  patients  fell  13 percent  between  1991  and  1994.  During  a similar 
period,  the  Commission  found  that,  of  all Medicare  facility  payments,  the  share  going  to 
post-hospital  care  providers  increased  from  6.9  percent  to  22.4  percent.  Facility  payments 
include  those  made  by  the  Medicare  program  and  co-insurance  companies,  as well  as 
beneficiary  co-payments.  As  one  example,  while  Medicare  payments  for  home  health  care 
totalled  an estimated  $14.4  billion  in  1995,  home  care  spending  is projected  by  the 
Congressional  Budget  Office  to  grow  to  $26  billion  by  the  year  2000.  As  the  average 
hospital  stay  decreases,  the  role  of the  hospital  discharge  planning  process  has  become  more 
critical. 
Hospital Discharge  Planning 
There  appears  to be  no  single  recommended  model  for  a hospital  discharge  planning  process. 
Definitions  of  what  discharge  planning  involves  and  the  organizational  structures  of the 
departments  and  professional  credentials  of the  discharge  planning  staff  vary  from  hospital  to 
hospital.  The  social  work  or  nursing  department  often  has  the  primary  responsibility  for 
discharge  planning,  generally  with  input  from  other  healthcare  team  members.  The 
responsibility  is sometimes  in the  case  management  or utilization  review  department. 
Effective  discharge  planning  identifies  the  patients  post-hospital  needs  early  to ensure 
discharge  to  a safe  environment  with  the  appropriate  level  of  services.  A typical  scenario 
might  look  like  this:  within  24 hours  of  entering  the  hospital,  the  admission  record  would  be 
screened  to  identify  a high  risk  patient  who  requires  discharge  planning.  Typical  high  risk 
criteria  might  include:  age  65 and  older,  living  alone  with  no  immediate  social  supports; 
1  stroke,  heart  attack,  chronic  obstructive  pulmonary  disease,  congestive  heart  failure, 
emphysema,  dementia,  Alzheimers,  AIDS,  or  other  possibly  life  threatening  illnesses; 
admission  from  a residential  care  home;  homelessness;  and  no  insurance. 
Once  a determination  has  been  made  that  a patient  needs  discharge  planning,  the  discharge 
planner  conducts  a psycho-social  assessment  and  meets  with  utilization  review  staff,  the 
patients  nurses  and  physicians,  or  other  relevant  interdisciplinary  team  members,  to discuss 
the  patients  care  plan.  Early  on,  the  discharge  planner  solicits  the  patients  preferences  and 
concerns,  and  reaches  out  to the  family  or  other  potential  care  givers  to get  their  input  and 
cooperation.  As  the  discharge  planner  gains  a clearer  understanding  of  the  level  of  care  that 
the  patient  needs  after  discharge,  he/she  analyzes  the  patients  insurance  coverage  in an effort 
to match  the  patients  needs  for  services  with  those  for  which  they  are  eligible. 
Patients  may  be  discharged  to  a variety  of  settings.  These  include  a patients  home  with  or 
without  services  from  a home  health  agency  or  a nursing  home.  One  recent  national  study 
on  post-acute  care  found  that  two-thirds  of  discharged  patients  received  post-acute  care 
services,  with  29 percent  going  to  nursing  homes  and  25 percent  going  home  with  care  from 
home  health  agencies  (another  8 percent  were  discharged  to  rehabilitative  homes). 
Regulations  Affecting  Hospital Discharge  Planning 
Each  hospital  is required  to  have  a discharge  planning  process  in place.  These  requirements 
are  addressed  in a number  of places,  including  Federal  laws  and  regulations,  State  licensing 
requirements,  and  the  Joint  Commission  on  Accreditation  of  Healthcare  Organizations 
accreditation  standards.  Federal  policies  related  to  financial  arrangements  between  hospitals 
and  post-hospital  services  can  be  found  in the  Federal  anti-kickback  regulations. 
Medicare  Conditions  of  Participation 
Federal  regulations2  require  that  hospitals  have  in place  a discharge  planning  process.  This 
process  must  apply  not  only  to  Medicare  and  Medicaid  patients  but  to  all patients  served  by 
the  hospital  who  need  discharge  planning.  The  rules  include  requirements  that: 
(1)  Patients  in need  of  evaluation  be  identified  on  a timely  basis; 
(2)  a discharge  planning  evaluation  be  completed  for  patients  identified  during  the 
initial  screening,  including  an evaluation  of  the  patients  capacity  for  self-care  and  the 
possibility  of  this  patient  being  cared  for  in the  environment  from  which  he/she 
entered  the  hospital; 
Kane,  R.L.,  M.D.,  Principal  Investigator.  A Study  of  Post-Acute  Care.  Institute  For 
Health  Services  Research  (HCFA  #17-C98891)  May  1994. 
2 42  CFR  Section  482.43,  effective  January  12,  1995 
2  (3)  discharge  plans  be  developed  by  qualified  personnel,  patients  be  counseled  as 
needed  to prepare  them  for  post-hospital  care  and  the  initial  implementation  of the 
patients  discharge  plan  be  done  by  the  hospital; 
(4)  the  hospital  must  transfer  or  refer  patients,  along  with  necessary  medical 
information,  to  appropriate  facilities  for  follow-up  care;  and 
(5)  the  hospital  must  reassess  its discharge  planning  process  on  an on-going  basis  to 
ensure  that  it is responsive  to the  discharge  needs  of their  patients. 
JCAHO  Requirements 
When  hospitals  are  accredited  by  the  Joint  Commission  on  Accreditation  of  Healthcare 
Organizations,  HCFA  does  not  independently  review  the  hospital.  The  JCAHOs  continuum 
of  care  standards  address  discharge  planning.  They  specifically  address  the  hospitals  need 
to provide  for:  referral,  transfer,  or discharge  of the  patient  to  another  level  of care  based  on 
the  patients  assessed  needs;  a discharge  process  which  results  in continuing  care  which  is 
appropriate;  exchange  of patient  care  and  clinical  information  when  patients  are  discharged; 
and  the  establishment  of  a procedure  to  resolve  denial-of-care  conflicts  over  care,  services, 
or payment  in the  hospital. 
Utilization  Review 
Federal  regulations3  discuss  utilization  review,  a process  which  seeks  to  assure  that  each 
patient  is discharged  from  the  hospital  at the  appropriate  time.  These  regulations  state  that 
the  hospital  must  have  in effect  a utilization  review  plan  that  provides  for  review  of  services 
furnished  by  the  institution  and  members  of  their  medical  staff  to patients  entitled  to 
Medicare  and  Medicaid. 
Patient  Freedom  to  Choose 
Section  1802  of  the  Social  Security  Act  seeks  to  ensure  that  free  choice  is guaranteed  to  all 
Medicare  patients.  It  states:  Any  individual  entitled  to  insurance  benefits  under  this  title 
may  obtain  health  services  from  any  institution,  agency,  or person  qualified  to participate 
under  this  title  if such  institution,  agency,  or person  undertakes  to provide  him  such 
services.    This  gives  patients  freedom  to  choose  who  they  want  as their  provider  of post-
hospital  services.  Some  within  the  home  health  industry  interpret  it even  further  to  say  that 
patients  must  be provided  with  choices  whenever  a discharge  planner  refers  them  for  post-
hospital  services4. 
Additionally,  Medicare  requires  all hospitals  that  participate  in the  Medicare  program  to 
3 42  CFR  Section  482.30  Conditions  of  Participation 
4 See  1997  Balanced  Budget  Act  section  on  page  x. 
3  provide  patients  with  An  Important  Message  From  Medicare  at the  time  of  admission. 

This  message  provides  information  on  discharge  from  the  hospital,  including  a description  of 

the  patients  right  to  appeal  to the  Peer  Review  Organization  if they  think  they  are  being 

asked  to  leave  the  hospital  too  soon. 

Anti-Kickback  Laws 

The  Federal  anti-kickback  statute5  is also  pertinent  to  the  discharge  planning  process. 

Aimed  at stemming  fraud  and  abuse,  this  statute  places  some  limitations  on  the  referral  of 

Medicare  and  Medicaid  patients  to  services.  It  makes  it illegal  to  offer  or pay  anything  of 

value  to  induce  a person  to  order  any  item  for  which  payment  may  be  made  under  the 

Medicare  or  Medicaid  programs. 

A separate  statute6  prohibits  a physician  with  a significant  ownership  interest  in or  a 

significant  financial  or  contractual  relationship  with  a home  health  agency  from  preparing 

plans  for  care  or  certifying  or recertifying  to the  need  for  care.  Finally,  another  statute7 

generally  prohibits  Medicare  or  Medicaid  payment  where  physicians  refer  patients  to  11 

kinds  of  healthcare  facilities  or  services,  such  as home  health  agencies,  in which  they  have 

an ownership  interest. 

State  Licensing 

Depending  on  the  State,  the  State  hospital  licensing  requirements  may  or  may  not  have 

discharge  planning  criteria.  In  New  York  State,  these  requirements  are  considered  by 

discharge  planners  to be  more  stringent  than  Federal  or  JCAHO  rules.  However,  it should 

be  noted  that  New  York  is not  necessarily  representative  of  the  country. 

Home  Health  Fraud  Alert 
In June  1995,  the  Office  of  Inspector  General  issued  a Home  Health  Fraud  Alert  which 
included  information  pertinent  to  the  hospital  discharge  planning  process.  It discussed 
providers  paying  or  receiving  kickbacks  in exchange  for  Medicare  or  Medicaid  referrals. 
Specifically,  providers  were  warned  that,  Providing  hospitals  with  discharge  planners,  home 
health  coordinators,  or  home  care  liaisons  in order  to  induce  referrals  can  constitute  a 
kickback.   
5 Section  1128B  [42 U.S.C.  Section  1320a-76(b)] 
6 Section  1814(a) 
7 Section  1877 
4  Health  Care Financing  Administration  Activities 
Oversight  of  Home  Health  Agency  Reimbursement 
As  the  number  of  hospitals  with  on-site  home  care  coordinators  grows,  so does  the  potential 
for  inappropriate  solicitation  and  increased  reimbursement.  The  HCFA  continues  to  oversee 
the  process  by  which  the  intermediaries  audit  home  health  agencies  reimbursement  claims 
for  home  health  agency  coordination  costs.  The  Health  Insurance  Manual8  specifies  which 
home  health  agency  coordination  costs  are  allowable.  While  specifying  that  some  costs  for 
activities  performed  at the  hospital  are  reimbursable,  it emphasizes  that  a careful  evaluation 
is needed  to  ensure  that  no  payment  is made  for:  patient  solicitation;  activities  duplicative  of 
the  hospitals  discharge  planning;  and/or  visits  by  home  health  agency  staff  to patients  not  yet 
referred. 
The  manual  also  addresses  reimbursement  rules  for  home  health  coordination  in hospital-
based  home  health  agencies.  In  these  instances,  reasonable  costs  of  hospital  discharge 
planning  services  performed  by  personnel  assigned  to the  home  health  agency  are  allowable, 
provided  that  the  costs  are  classified  as costs  of  the  hospital  and  do  not  represent  a 
duplication  of  costs  performed  by  other  personnel. 
Uniform  Needs  Assessment  Instrument 
As  the  result  of  a legislative  mandate,  HCFA  developed  and  has  begun  testing  a Uniform 
Needs  Assessment  Instrument  to  evaluate  a patients  requirements  for  post-acute  care. 
Recent  Studies 
An  Office  of  Inspector  General  report  entitled  Financial  Arrangements  Between  Physicians 

and  Health  Care  Businesses,  mandated  by  Congress  in June  of  1988  and  published  May 

1989,  analyzed  the  extent  and  impact  of  financial  arrangements  between  physicians  and  other 

service  providers.  The  major  finding  was  that  many  physicians  had  financial  relationships 

with  health  care  businesses  to  which  they  referred  patients.  A September  1993  report 

entitled  Medicare  Home  Infusion  Therapy  found  that  physician  ownership  of  home  infusion 

companies  (and  other  financial  arrangements)  were  common. 

A recent  study,  Understanding  Hospital  Referrals  to  Home  Health  Agencies,  by  Kathryn 

H.  Dansky,  RN,  PhD  et al.  studied  1990  discharge  data  from  61 Pennsylvania  hospitals. 

They  found  that  patients  who  were  discharged  from  hospitals  that  own  a home  health  agency 

are  21 percent  more  likely  to  receive  a referral  for  home  care  services  than  those  who  are 

discharged  from  hospitals  that  do  not  own  an agency.  This  increased  referral  rate  was 

greater  for  urban  than  it was  for  rural  hospitals. 

The  previously  referenced  HCFA  funded  research  project,  A Study  of  Post-Acute  Care, 

 (HIM)  #2113 
5  included  an  analysis  of  whether  hospital  ownership  of  a post-acute  facility  was  a good 
predictor  of  the  place  to  which  patients  would  be  discharged.  The  fact  that  a hospital  owned 
a post-acute  facility  was  not  found  to be  a consistent  predictor  of  whether  or  not  a patient 
received  post-acute  services,  or  of  whether  the  post-acute  provider  was  hospital-owned. 
Other  relevant  work  includes  research  done  by  the  Prospective  Payment  Assessment 
Commission  which  sought,  among  other  things,  to  analyze  whether  hospital  ownership  of  a 
post-acute  unit  affected  the  average  length  of  stay  in the  hospital.  The  Commission  found 
that  the  average  length  of  hospital  stay  was  lower  in hospitals  which  owned  post-acute  care 
units  than  in hospitals  which  did  not  own  such  a unit.  In  their  view,  this  finding  is 
significant  because  it raises  the  question  of  whether  hospitals  are  lowering  their  costs  for 
patients  for  whom  they  are  receiving  a lump  sum  payment  from  Medicare  and  discharging 
those  same  patients  to post-acute  care  for  which  they  are  being  paid  on  a cost  basis. 
Operation Restore  Trust 
This  inspection  is being  conducted  as part  of  the  Department  of  Health  and  Human  Services 
anti-fraud  initiative  called  Operation  Restore  Trust  (ORT).  This  is a joint  effort  by  the 
Office  of  Inspector  General,  HCFA,  and  the  Administration  on  Aging  designed  to  coordinate 
Federal  and  State  resources  to combat  fraud,  waste,  and  abuse  related  to home  health 
agencies,  nursing  homes,  and  medical  equipment  and  supplies.  This  initiative  is focused  on 
5 States  (California,  Florida,  Illinois,  New  York,  and  Texas)  which  together  account  for  40 
percent  of  Medicare  beneficiaries  and  expenditures. 
METHODOLOGY 
Samnle  Selection 
A stratified  random  sample  of  1,000  Medicare  beneficiaries  was  selected  from  the  1 percent 
1995  inpatient  Common  Working  File.  We  used  this  file  even  though  it contained  only  89 
percent  of  1995  claims  because  we  needed  the  most  up-to-date  information  we  could  get  to 
survey  Medicare  beneficiaries  about  their  hospital  and  post-hospital  experience.  We  selected 
all claims  where  the  discharge  date  was  between  September  1,  1995  and  December  3 1,  1995 
and  the  discharge  indicator  showed  the  patient  was  sent  to  a skilled  nursing  home, 
intermediate  care  nursing  home  or home  health  agency.  For  purposes  of this  report,  we 
grouped  skilled  and  intermediate  care  facilities  together  and  refer  to them  as nursing  homes. 
The  result  of this  extract  was  6,915  claims  for  6,136  beneficiaries.  The  Medicare  numbers 
for  these  6,136  beneficiaries  were  matched  to the  Enrollment  Database  to  find  out  which 
beneficiaries  were  alive.  A total  of  1,3 16 beneficiaries  had  died,  leaving  4,820  claims. 
These  4,820  claims  were  divided  into  two  strata:  the  five  Operation  Restore  Trust  States  and 
all other  States.  There  were  1,572  inpatient  claims  for  the  five  ORT  States  and  3,248  for  all 
others.  We  then  randomly  selected  a total  of  1,000  beneficiaries;  750  from  the  ORT  strata 
and  250  from  all others.  Unless  otherwise  noted,  there  were  no  significant  differences  in 
respondents  answers  based  on  whether  they  were  in the  ORT  or  non-ORT  strata.  Since 
managed  care  data  is not  included  in the  Common  Working  File  and  there  is no  itemization 
6 
 of  services,  managed  care  beneficiaries  were  not  included  in our  sample  for  this  study. 
The  hospital  provider  number  was  then  selected  from  each  beneficiary  inpatient  claim.  This 
number  was  subsequently  found  in the  Online  Survey  and  Certification  Reports  data,  as well 
as in the  Hospital  Cost  Report  Information  System  and  used  to  identify  which  hospitals 
owned  nursing  homes  or home  health  agencies.  The  hospital-based  designation  was  utilized 
as a surrogate  for  ownership.  These  files  were  also  used  to  identify  the  nursing  home  or 
home  health  agency  (HHA)  provider  number. 
The  Common  Working  File  was  divided  between  the  nursing  home  and  home  health  agency 
stay  records  for  sample  beneficiaries.  The  provider  numbers  were  compared  to  the  hospital-
owned  provider  numbers  to determine  hospital  ownership.  This  enabled  us  to  identify  those 
beneficiaries  in our  sample  who  were  discharged  from  hospitals  to  a post-hospital  service 
owned  by  their  discharging  hospital,  as well  as those  discharged  to  services  that  were  not 
owned  by  their  hospital. 
For  the  purposes  of  this  study,  we  use  the  term  post-hospital  services  to  refer  to care  by 
either  a nursing  home  or  a home  health  agency.  Post-hospital  services  which  are  not  owned 
by  the  discharging  hospital  are  referred  to as  independent.   
Utilization  Data 
We  obtained  data  for  each  beneficiary  in the  sample  for  the  period  during  hospitalization  and 
the  6 months  subsequent  to discharge  from  the  hospital.  This  data  included:  the  beneficiarys 
diagnosis  related  group;  the  hospital  length  of  stay;  the  hospital  charges;  the  type  and 
duration  of the  post-hospital  service;  the  post-hospital  diagnoses;  the  post-hospital  charges 
and,  whether  and  how  often  the  beneficiary  was  re-admitted  to the  hospital  during  the  6 
month  period  following  discharge  from  the  hospital.  This  information  was  analyzed  to 
compare  those  beneficiaries  who  went  to  their  hospital-owned  post-hospital  facilities  with 
those  who  did  not. 
Beneficiary  Ouestionnaire 
Since  previous  Office  of  Inspector  General  studies  have  demonstrated  the  value  of  data 
obtained  from  beneficiaries  in understanding  important  issues,  we  used  a mail  survey  to 
contact  beneficiaries  about  their  hospital  discharge  planning  experience  and  determine  their 
level  of  satisfaction  with  the  process  and  its outcome. 
From  the  sample,  we  identified  the  name  and  address  of the  beneficiary,  and  sent  a mail 
questionnaire  to  each  of  the  1,000  beneficiaries  in our  sample  to be  answered  by  either  the 
beneficiary  or  his/her  surrogate.  We  asked  questions  about:  the  hospital  discharge  planning 
that  was  done  for  them;  how  they  thought  nursing  homes  or  home  health  agencies  were 
chosen;  whether  they  were  given  choices  for  their  post-hospital  care;  how  satisfied  they  were 
with  the  post-hospital  service  selection  process,  as well  as with  the  service  itself;  changes  in 
their  activities  of daily  living  and  in their  overall  health;  and,  whether  or  not  the  post-
hospital  service  they  received  helped  in their  recovery.  We  received  responses  from  650  (65 
7  percent)  of  the  1,000  surveys.  After  excluding  beneficiaries  whose  data  records  were 

incomplete,  561  beneficiaries  remained--362  who  received  home  health  services  and  199 who 

went  to nursing  homes  upon  discharge.  We  then  compared  the  answers  of  those  beneficiaries 

who  received  services  from  providers  owned  by  their  discharging  hospital  to  those  who 

received  services  from  providers  not  owned  by  their  discharging  hospital. 

Hospital  Discharge  Planner  Questionnaire 

We  sent  mail  questionnaires  to the  discharge  planning  departments  of  our  sample 

beneficiaries  discharging  hospitals.  We  asked  discharge  planners  questions  about:  their 

experiences  as a hospital  discharge  planner;  directives  their  hospital  had  given  them 

regarding  their  responsibility  in the  discharge  planning  process;  how  the  choice  of post-

hospital  service  for  our  sample  beneficiary  was  made;  any  concerns  they  have  in the  area  of 

discharge  planning;  and  other  questions  about  the  discharge  planning  process  when  patients 

go  to  home  health  agencies  and  nursing  homes.  The  discharge  planners  were  also  asked  to 

send  copies  of  relevant  documents  including:  the  screening  criteria  they  use  to determine 

which  patients  receive  discharge  planning  services;  a checklist  of  discharge-related  discussion 

points  to  cover  with  patients  and  their  families;  and,  written  procedures  on  determining 

which  home  health  agency  or  nursing  home  to which  Medicare  patients  will  be  referred.  We 

then  compared  the  answers  of  those  discharge  planners  from  hospitals  that  owned  a nursing 

home  or  home  health  agency  to  those  that  did  not. 

Since  our  unit  of  analysis  was  a beneficiary  and  there  were  instances  where  multiple 

beneficiaries  went  to  a particular  hospital,  we  duplicated  pertinent  records  and  counted  those 

discharge  planners  responses  more  than  once.  Discharge  planner  questionnaires  were 

received  for  630  (63 percent)  of  the  sample  beneficiaries;  the  number  of unique  discharge 

planner  responses  received  was  466. 

All  differences  reported  between  subgroups  are  statistically  significant  at the  90 percent  level 

unless  otherwise  noted. 

This  inspection  was  conducted  in accordance  with  the  Quality  Standards  for  Inspections 

issued  by  the  Presidents  Council  on  Integrity  and  Efficiency. 

8 
 FINDINGS 

HOSPITAL  OWNERSHIP  SEEMS  TO  HAVE  LITTLE  INFLUENCE  ON  WHICH 
NURSING  HOME  PATIENTS  ARE  REFERRED  TO 
Regardless  of whether  the nursing  home  was owned by the discharging  hospital,  nursing 
home  beneficiaries  report having  input in the referral  process 
We  analyzed  the  discharge  process  experienced  by  beneficiaries  in our  sample  who  went  to 
nursing  homes.  Regardless  of  whether  the  nursing  home  was  owned  by  the  discharging 
hospital,  only  13 percent  of beneficiaries  say,  the hospital  just  told  me  where  to go.  Only 
a quarter  of  them  report  no say  in the  decision  about  which  nursing  home  to  choose. 
Beneficiaries  who  went  to hospital-owned  nursing  homes  are  likely  to  report  that  someone 
from  the  hospital  talked  to them  about  which  nursing  home  they  wished  to be  referred  to  (73 
percent). 
Seventy-nine  percent  of  all beneficiaries  who  were  referred  to  a nursing  home  report  that 
they  felt  no pressure  in their  choice  of  a particular  nursing  home.  There  was  no 
significant  difference  in the  responses  of  those  who  did  and  those  who  did  not  go  to  the 
hospital-owned  nursing  home.  In  addition,  many  beneficiaries  report  that  the  decision  to  go 
to  a particular  nursing  home  was  made  by  a relative. 
There  appears  to be  a correlation  between  the  amount  of  input  a beneficiary  believes  he/she 
has  in the  referral  process  and  his/her  satisfaction  with  the  process  and  its outcome.  With 
regard  to nursing  homes,  those  who  indicate  that  they  had  no  say  in their  referral  to  a 
particular  nursing  home  were  less  likely  (47 percent)  than  beneficiaries  who  had  all of  the 
say  (93 percent)  to  report  that  they  were  satisfied  with  how  the  referral  to the  nursing  home 
was  made. 
The  majority  of  Medicare  patients  who  were  in a nursing  home  prior  to  admission  to the 
hospital  returned  to  the  same  service  provider  after  hospitalization.  The  beneficiaries  that 
went  to  a different  nursing  home  generally  attribute  the  switch  to  a change  in their  health 
care  needs  after  discharge. 
Regardless  of ownership,  discharge  planners  report that hospital ownership  is not a major 
factor  in the nursing  home  referral  process 
Just  5 percent  of the  discharge  planners  from  hospitals  that  own  nursing  homes  report  that 
they  refer  patients  to  the  hospital-owned  nursing  home  unless  patients  and  families  object. 
None  of  the  discharge  planners  from  hospitals  that  own  nursing  homes  report  that  it is 
generally  understood  that  they  should  send  all their  patients  to  the  hospital-owned  nursing 
home. 
Fourteen  percent  of  discharge  planners,  when  asked  which  things  were  important  in choosing 
the  nursing  home  that  a Medicare  patient  would  go  to,  answered,  the  nursing  home  is 
9  owned  by  the  hospital.    None  of  those  discharge  planners  cited  it as the  main  reason. 
Hospitals are not likely to have procedures  for  referral  to nursing  homes 
Two-thirds  of  discharge  planners  from  hospitals  which  own  nursing  homes  report  not  having 
instructions  on  nursing  home  referral. 
Forty-three  discharge  planners  submitted  attachments  regarding  their  nursing  home  referral 
policies.  The  policies  outlined  in these  attachments  were  generally  dictated  by  bed 
availability.  The  typical  procedure  was  that  a patient  would  select  three  to  five  nursing 
homes  in a 50 mile  radius.  The  beneficiary  would  go  to the  first  nursing  home  to  accept 
them. 
In  the  attachments  we  received  on  this  issue,  hospital  ownership  of  a nursing  home  did  not 
seem  to have  a strong  affect  on  the  discharge  policy.  Of the  23  attachments  received  from 
hospitals  which  owned  a nursing  home,  only  four  mentioned  their  nursing  home.  An 
example  is that  patients  would  be  sent  to  the  hospital-owned  nursing  home  only  if the  patient, 
his  or her  family  and  doctor  had  no  preference.  All  of the  attachments  seemed  to  indicate 
that  the  patient  was  to be  given  input  into  the  process  of choosing  their  nursing  home. 
Forty percent  of patients  discharged  from  hospitals that owned nursing  homes  were referred 
to the nursing  home  owned by their discharging  hospital 
Focusing  only  on  nursing  home  patients  who  were  discharged  from  a hospital  that  owned  a 
nursing  home,  we  found  that  only  40 percent  of  them  went  to the  hospital-owned  nursing 
home.  The  nursing  home  referral  process  is a complex  one  with  many  factors  at work. 
These  include  limited  service  and  bed  availability,  as well  as the  proximity  of  the  nursing 
home  to  relatives  or  friends. 
HOSPITAL  OWNERSHIP  DOES  INFLUENCE  THE  LENGTH  OF  STAY  IN BOTH 
THE  HOSPITAL  AND  THE  NURSING  HOME 
Hospital ownership  results in both shorter  hospital stays and  nursing  home  use of longer 
duration 
As  discussed  in the  background  section,  there  has  been  concern  and  some  evidence  that 
hospitals  which  own  nursing  homes  discharge  patients  sooner  to their  own  facilities  and  those 
patients  stay  in the  facilities  longer  and  are  readmitted  to the  hospital  more  frequently.  This 
raises  the  question  of  whether  hospitals  are  lowering  their  costs  for  patients  for  whom  they 
are  receiving  a lump  sum  prospective  payment  from  Medicare  and  discharging  those  same 
patients  to post-hospital  services  for  which  they  are  being  paid  on  a cost  basis.  This  cost 
shifting  would  result  in increased  Medicare  reimbursement  for  the  hospital.  When  we 
analyzed  relevant  data  for  beneficiaries  who  got  services  from  hospital-owned  nursing  homes, 
we  found  additional  evidence  supporting  this  concern. 
We  found  that  the  patients  discharged  to  the  hospital-owned  nursing  homes  had  significantly 
10 
 shorter  hospital  stays.  The  average  number  of  days  that  beneficiaries  were  in the  hospital 
prior  to going  to  a nursing  home  owned  by  their  discharging  hospital  was  6.8,  as compared 
to  8.9  days  for  those  beneficiaries  who  went  to  a nursing  home  independent  of their  hospital. 
This  result  is statistically  significant.  (See  Appendix  B.) 
Those  beneficiaries  who  went  to  a nursing  home  owned  by  the  hospital  they  were  discharged 
from  also  averaged  a longer  stay  in the  nursing  home.  Beneficiaries  who  went  to the  owned 
facility  averaged  a 37 day  nursing  home  stay  while  those  who  went  to  a nursing  home 
independent  of their  hospital  averaged  a 29 day  nursing  home  stay.  This  is also  a statistically 
significant  difference.  (See  Appendix  B.)  This  supports  the  concern  that  hospitals  are 
shifting  patients  from  acute  care,  reimbursed  under  a lump  sum  prospective  payment,  to post-
acute  care  in nursing  homes,  which  is reimbursed  on  a cost  basis,  thus  maximizing  Medicare 
reimbursement. 
There  was,  however,  no  significant  difference  in the  number  or hospital  readmissions  based 
on  ownership.  Also,  our  sample  selection  did  not  allow  for  analysis  of  specific  diagnosis 
related  groups  or  sub-components  of  care  providers  such  as skilled  nursing  facility  distinct 
units. 
HOSPITAL  OWNERSHIP  INFLUENCES  REFERRALS  TO  HOME  HEALTH 
AGENCIES  MORE  THAN  IT DOES  FOR  NURSING  HOMES 
Many beneficiaries  do not have full  choice  in selecting a home  health  agency 
In  contrast  to  nursing  home  beneficiaries,  beneficiaries  who  went  to hospital-owned  home 

health  agencies  were  more  likely  than  those  who  went  to  agencies  not  owned  by  their 

hospital  to  report  that  the  hospital  just  sent  home  care  people  to them.  Thirty-eight  percent 

of beneficiaries  who  went  to hospital-owned  home  health  agencies  report  that  the hospital 

just  sent  home  care  people  to them.  In  contrast,  only  24 percent  of  the  recipients  of  home 

health  services  which  were  independent  of  their  discharging  hospital  reported  this. 

Additionally,  recipients  of  hospital-owned  services  were  less  likely  to  indicate  that  they  had 

some  form  of  input  into  the  choice  of  a home  care  agency.  These  recipients  were  less  likely 

to report  one  of  the  following: 

0  the hospital  advised  me  but  I made  my  own  decision; 
0  I made  the  decision  on  my  own  without  any  advice  from  the  hospital; 
0  I asked  for  advice,  and  took  the  hospitals  recommendation; 
0  the hospital  gave  me  a list  of  home  care  agencies  and  I picked  one. 
Because  of the  relatively  small  sample  size,  we  cannot  demonstrate  that  the  differences 
discussed  above  are  statistically  significant.  However,  the  trend  they  point  to  is consistent 
with  a number  of  other  related  survey  respondent  trends. 
When  Medicare  beneficiaries  were  asked  whether  someone  from  their  discharging  hospital 
suggested  the  name  of  a home  health  agency  or they  thought  of the  agency  themselves, 
beneficiaries  who  got  HHA  services  from  providers  which  were  owned  by  their  discharging 
11 
 hospital  were  less  likely  to  report  that  they  thought  of  the  home  care  agency  themselves. 
While  a quarter  of  nursing  home  beneficiaries  report  no  say  in the  decision  about  which 
nursing  home  to go  to,  more  beneficiaries  who  got  home  health  services  (one-third)  report 
having  no  say,  regardless  of  ownership.  There  appears  to be  a correlation  between  the 
amount  of  input  a beneficiary  believed  he/she  had  in the  referral  process  and  his/her 
satisfaction  with  the  process.  Those  who  indicate  that  they  had  no  say  in their  referral  to  a 
particular  home  health  agency  were  less  likely  (85 percent)  than  beneficiaries  who  had  all of 
the  say  (98  percent)  to report  that  they  were  satisfied  with  how  the  referral  to the  home  care 
agency  was  made. 
Relationship  Between  Beneficiary  Input and 
Satisfaction  with the Referral  Process 
100 
Lsamd 
90  AllofIhesay 
so  No Say 
c  70 
!x 
s 
b  40 
a 
30 
20 
10 
0 
Nunring Hm  HHA 
The  majority  of  Medicare  patients  who  had  home  health  agency  services  before  entering  the 

hospital,  used  the  same  service  provider  after  their  hospitalization.  This  is true  regardless  of 

whether  or  not  a patient  was  in a hospital  which  owns  an HHA.  When  patients  who  report 

not  using  the  same  home  care  agency  after  their  hospitalization  were  asked  why  they 

switched  home  care  agencies  after  their  hospitalization,  most  of  them  say  that  they  did  not 

like  their  original  agency.  No  beneficiaries  report  changing  agencies  because  the  hospital 

indicated  they  should  use  the  hospital-owned  agency. 

Sixty-two percent  of patients discharged  from  hospitals that owned a home  health  agency 
were referred  to an agency  owned by the hospital 
In  contrast  to  nursing  home  beneficiaries,  focusing  only  on  home  health  patients  who  were 
discharged  from  a hospital  that  owned  a home  health  agency,  we  found  that  fully  62 percent 
of them  went  to  agency  owned  by  the  discharging  hospital. 
12 
 Discharge  planners  report that hospital ownership  is a factor  in their referral  process  to 
home  health  agencies 
Nineteen  percent  of  discharge  planners  from  hospitals  that  own  home  health  agencies  report 
that  it is generally  understood  that  they  refer  all their  patients  who  need  home  health  care  to 
their  hospital-owned  agency  or  that,  unless  patients  or  families  object,  they  refer  all patients 
to their  hospital-owned  agency. 
When  discharge  planners  were  asked  which  things  were  important  in choosing  a home  health 
agency  for  a Medicare  beneficiary,  25 percent  of those  from  hospitals  that  own  a home 
health  agency  responded,  the home  health  agency  is owned  by  the  hospital.  Seven  percent 
of them  give  it as the  main  reason. 
Almost  10 percent  of the  discharge  planners  from  hospitals  that  own  home  health  agencies 
believe  that  someone  from  the  hospital  puts  pressure  on  patients  to choose  a particular  home 
health  agency  compared  to  6 percent  when  there  is no  ownership.  Because  of  the  relatively 
small  sample  size,  we  cannot  demonstrate  that  this  last  difference  is statistically  significant. 
However,  this  trend  is consistent  with  other  related  survey  responses. 
Hospitals owning  home  health  agencies  are somewhat more  likely to have written or verbal 
referral  procedures  than  those without ownership 
Fifty-three  percent  of  discharge  planners  from  hospitals  that  own  home  health  agencies 

reported  having  written  procedures  or  verbal  instructions  for  determining  to  which  home 

health  agency  a patient  is to be  referred.  Forty-one  percent  of  discharge  planners  from 

hospitals  that  do  not  own  agencies  report  having  similar  instructions. 

Of the  121 discharge  planners  that  reported  having  written  procedures,  almost  half  (58)  of 

them  submitted  attachments  in response  to  our  request  for  procedural  information  on  the 

home  health  care  referral  process.  Of these,  the  majority  (33)  cited  patient  choice  as the 

dominant  factor  in their  discharge  process.  When  patient  choice  is cited,  the  patient  is 

usually  presented  with  a list  of  options  from  which  to choose. 

Fourteen  of  the  planners  who  submitted  attachments  indicated  that  patients  without  a 

preference  were  directed  to  their  hospital-owned  home  health  agency.  A typical  example  of 

this  policy  would  be that  It is the  policy  of  the  case  management  department  to  refer 

patients  to X home  health  agency  if the  patient  lives  in the  area  and  does  not  express  a 

preference  for  another  care  provider.    Seven  of the  discharge  planners  submitted 

attachments  which  cited  the  discharge  planning  team  or physicians  preference  as the 

deciding  factor  in referring  patients  to  a particular  home  health  agency.  In  this  case,  a policy 

would  not  mention  patient  choice  but  would  state  that  the physician  may  recommend  that  a 

specific  vendor  be used.   

Only  four  attachments  contained  language  which  strongly  encouraged  the  promotion  of 

hospital-owned  HHAs  in the  discharge  process.  One  of these  even  included  a hospital  policy 

that  says,  Referrals  leaving  the  [hospital-owned]  system  =  $$$  leaving  the  system.   

13 
 Discharge  planners  report giving  adequate  choice 
Almost  all discharge  planners  say  that  there  is meaningful  beneficiary  involvement  in the 
discharge  planning  process.  Regardless  of  ownership,  84 percent  of  all discharge  planners 
report  that  beneficiaries  have  all  of the  say  or  quite  a bit  of  say  in the  choice  of  a home 
health  agency  or  nursing  home  to  go  to  and  less  than  10 percent  report  that  beneficiaries 
have  no  say  or just  a little  say. 
Discharge  planners  rank  a patients  diagnosis  and  home  support  as the  most  important  factors 
in determining  the  patients  need  for  post-hospital  services.  Similarly,  in deciding  whether  to 
refer  a patient  to  a home  health  agency  or  a nursing  home,  discharge  planners  cite  the 
patients  medical  needs,  the  need  for  24 hour  supervision  and  home  support  as the  dominant 
considerations. 
Most  discharge  planners  list  lack  of patient/family  commitment  and  availability  of  appropriate 
services  as the  greatest  obstacles  to effective  discharge  planning  (81 percent  and  67 percent, 
respectively).  Five  percent  of the  respondents  cite  hospital  pressure  to  discharge  patients  to 
inappropriate  post-hospital  services  as a problem  in discharge  planning. 
While  72 percent  of  the  discharge  planners  report  having  no  checklist  of  discharge  related 
discussion  points,  the  majority  of  those  without  a checklist  believe  that  one  would  be helpful 
to them.  See  Appendix  A for  a sample  checklist  based  on  common  factors  from  selected 
checklists  submitted  by  the  discharge  planners. 
HOSPITAL  OWNERSHIP  INFLUENCES  THE  DURATION  OF  HOME  HEALTH 
AGENCY  SERVICES 
Hospital ownership  results in home  health  agency  use of longer  duration 
As  with  nursing  homes,  there  has  been  some  evidence  that  hospitals  which  own  home  health 
agencies  discharge  patients  sooner  to  their  own  facilities  and  those  patients  stay  in the 
facilities  longer.  We  found  some  evidence  supporting  this  concern. 
Those  beneficiaries  that  received  services  from  a home  health  agency  owned  by  the  hospital 
they  were  discharged  from  averaged  49  days  of  service  while  those  receiving  care  from  a 
home  health  agency  independent  of  their  hospital  averaged  37 days  of  service.  This  is a 
statistically  significant  difference.  (See  Appendix  B.) 
The  average  number  of  days  that  beneficiaries  were  in the  hospital  prior  to receiving  care 
from  a home  health  agency  owned  by  their  discharging  hospital  was  7.3  days.  For  those 
beneficiaries  who  received  care  from  an agency  independent  of  their  discharging  hospital  the 
average  was  8.3  days.  This  one  day  difference  was  not  satistically  significant. 
The  number  of hospital  readmissions  during  the  6 month  period  after  hospital  discharge  to  a 
home  health  agency  showed  no  significant  differences  based  on  ownership. 
14 
 BENEFICIARIES  WHO  GO  TO  HOSPITAL-OWNED  NURSING  HOMES  AND 
HOME  HEALTH  AGENCIES  REPORT  BETTER  CONTINUITY  OF  CARE 
One  goal  of  the  discharge  planning  process  is to promote  a strong  connection  between  the 
care  provided  in the  hospital  and  the  care  given  by  the  home  health  agency  or  nursing  home. 
It is generally  assumed  that  if discussions  are  held  with  patients  regarding  their  post-hospital 
needs  and  how  they  can  be  addressed,  the  likelihood  that  these  needs  will  be  met  is 
improved.  It is also  assumed  that  the  earlier  discussions  are  held  and  the  more  comfortable 
beneficiaries  feel  with  the  timing  of  their  hospital  discharge,  the  better  the  continuity  of their 
care  will  be. 
Beneficiaries  who went to hospital-owned nursing  homes  are more  likely to report having 
been  talked to early and  having  been  discharged  at the right time 
Beneficiaries  who  received  services  from  hospital-owned  nursing  homes  are  much  more 

likely  to  report  having  been  consulted  in the  beginning  or middle  of  their  stay  about  the 

services  they  might  need  after  their  discharge.  Those  who  received  services  from  a nursing 

home  which  was  not  owned  by  their  hospital  are  more  likely  to  report  having  been  talked  to 

just  before  they  left  the  hospital  or  not  at all. 

Ninety-five  percent  of the  beneficiaries  who  went  to  a hospital-owned  nursing  home  say  that 

someone  from  the  hospital  spoke  to them  (or  their  families)  about  the  services  they  thought 

they  would  need  after  discharge.  In  contrast,  only  61 percent  of those  beneficiaries  who  did 

not  go  to  a hospital-owned  nursing  home  reported  having  a similar  conversation. 

Furthermore,  the  beneficiaries  who  went  to the  hospital-owned  nursing  home  were  twice  as 

likely  to  report  that  the  information  hospital  staff  gave  them  about  the  post-discharge  services 

they  would  need  was  helpful.  Finally,  beneficiaries  who  received  services  from  hospital-

owned  nursing  homes  are  more  likely  to  report  believing  that  they  were  discharged  from  the 

hospital  at the  right  time  rather  than  too  soon. 

Beneficiaries  who went to the nursing  home  owned by their hospital are more  likely to 
report that the connection  between their care providers  is very good 
Beneficiaries  who  received  services  from  the  hospital-owned  nursing  home  are  also  more 
likely  to  report  that  they  received  the  services  they  were  told  they  would  get  (100  percent 
versus  64 percent).  In  addition,  a greater  proportion  of  this  group  said  that  the  connection 
between  the  care  they  got  in the  hospital  and  the  care  they  received  from  the  nursing  home 
was  very  good  (88 percent  versus  43 percent). 
In  addition,  a higher  percentage  of beneficiaries  who  went  to their  hospital-owned  nursing 
home  report  that  their  overall  health  improved  in the  nursing  home  (77 percent  versus  43 
percent). 
15 
 Beneficiaries  who went to hospital-owned home  health  agencies  are more  likely to report 
having  been  discharged  at the right time 
Beneficiaries  who  received  services  from  hospital-owned  agencies  are  more  likely  to report 
believing  that  they  had  been  discharged  from  the  hospital  at the  right  time  (89 percent  versus 
77 percent)  rather  than  too  soon  (8 percent  versus  15 percent).  In  addition,  beneficiaries 
who  got  services  from  the  hospital-owned  home  health  agency  are  more  likely  than  those 
who  received  independent  services  to know  what  health  care  services  they  were  supposed  to 
get  after  leaving  the  hospital. 
Beneficiaries  who went to hospital-owned  home  health  agencies  are more  likely to report 
that the connection  between their care providers  was very good 
Beneficiaries  who  received  services  from  the  hospital-owned  home  health  agency  are  also 
more  likely  to  report  that  they  received  the  home  health  agency  services  they  were  told  they 
would  get  (92 percent  versus  83 percent).  In  addition,  a greater  proportion  of  this  group  said 
that  the  connection  between  the  care  they  got  in the  hospital  and  the  care  they  received  from 
the  home  health  agency  was  very  good.  Because  of  the  relatively  small  sample  size,  we 
cannot  demonstrate  that  the  difference  reported  with  regard  to the  connection  between  care 
providers  was  statistically  significant.  However,  the  trend  which  the  responses  point  to  is 
consistent  with  a number  of  other  related  survey  responses. 
HOSPITAL  OWNERSHIP  DOES  NOT  IMPACT  BENEFICIARIES  REPORTED 
LEVEL  OF  SATISFACTION 
Beneficiaries  report high  levels of satisfaction with the discharge  planning  process 
Over  80 percent  of beneficiaries  report  being  satisfied  with:  how  much  of  a say  they  had  in 
the  kind  of  services  they  would  get  after  leaving  the  hospital;  how  well  the  hospital  planned 
for  their  post-hospital  services;  as well  as,  how  the  home  health  referral  decision  was  made. 
This  was  true  regardless  of  whether  or  not  the  Medicare  patient  went  to  a home  health 
agency  owned  by  their  discharging  hospital. 
Beneficiary  satisfaction with nursing  home  or home  health  agency  services does not differ 
based on hospital ownership 
We  asked  beneficiaries  about  their  level  of  satisfaction  with:  the  care  they  got  in the  nursing 
home;  how  long  each  visit  by  a nursing  home  person  lasted;  how  well  the  nursing  home 
people  worked  together;  and  how  well  the  nursing  home  people  responded  to their  needs. 
Over  85 percent  of  beneficiaries  reported  being  satisfied  in all of  these  areas.  This  pattern 
held  true  when  beneficiaries  were  asked  about  their  overall  level  of  satisfaction  as well. 
We  asked  beneficiaries  about  their  level  of  satisfaction  with:  the  number  of home  health 
agency  visits;  how  long  each  visit  was;  how  well  the  staff  worked  together;  and,  how  well 
staff  responded  to  their  needs.  Almost  all  (90 percent)  beneficiaries  reported  being  satisfied 
in all of  these  areas.  This  pattern  held  true  when  beneficiaries  were  asked  about  their  overall 
level  of  satisfaction  as well. 
16 
 RECOMMENDATIONS 

Our  findings  suggest  that  hospital  ownership  of  nursing  homes  plays  a significant  role  with 
regard  to the  nursing  home  beneficiary  utilization  patterns.  The  hospital  stay  is shorter  and 
the  nursing  home  stay  longer  thus  the  hospital  may  be  shifting  cost  from  a prospective 
payment  system  to  a cost-based  system,  maximizing  Medicare  reimbursement.  Therefore, 
we  recommend  the  following: 
The  HCFA  should  develop  statistical  methods  to  target  for  special  review  providers 
b 	
who  may  be  maximizing  their  Medicare  reimbursement  in this  way.  The  records  of 
these  providers  should  be  reviewed  by  the  Peer  Review  Organizations,  as in the  past, 
or  through  some  other  suitable  mechanism.  Providers  who  are  found  to be 
inappropriately  discharging  beneficiaries  to their  own  nursing  homes  should  be  subject 
to payment  adjustments  and  appropriate  fines  or penalties. 
Our  findings  also  suggest  that  hospital  ownership  plays  a significant  role  in home  health 
agency  referral  discussions  and  some  role,  albeit  a lesser  one,  in nursing  home  referral 
discussions.  In  addition,  we  found  that  many  Medicare  beneficiaries  do  not  have  full  choice 
in selecting  a home  health  agency  or  nursing  home.  Therefore,  we  recommend  the 
following: 
b 	 The  HCFA  should  assure  that  hospitals  disclose  ownership  of home  health  agencies 
and  nursing  homes  in a systematic  way. 
0 	 Hospitals  which  own  home  health  agencies  and  nursing  homes  should  be 
required  to  disclose  the  names  of  the  home  health  agencies  and  nursing  homes 
which  they  own  to  all beneficiaries  who  are  possible  candidates  for  these  post-
hospital  services. 
 	 Hospitals  which  own  home  health  agencies  and  nursing  homes  should  be 
required  to disclose  this  information  to  HCFA. 
The  HCFA  should  take  additional  measures  to  assure  that  when  beneficiaries  are 
b 	
being  discharged  from  the  hospital  they  are  given  a choice  in  selecting  a home  health 
agency  or  nursing  home  from  which  to receive  care. 
0 	 Hospitals  should  be  required  to  inform  patients  (or  their  families)  that  they  are 
free  to  choose  among  home  health  agency  providers  and  nursing  homes.  This 
information  should  be provided  as early  as possible. 
 	 Hospitals  should  maintain  a file  of  Medicare  participating  home  health 
agencies  and  nursing  homes  in the  area  and  provide  beneficiaries  (or  their 
families)  with  a list  of  alternatives  which  are  appropriate  for  the  level  of  care 
they  need. 
17  Since  our  findings  support  the  need  for  additional  Medicare  beneficiary  information 
b 	
related  to post-hospital  services  and  choice,  we  recommend  that  HCFA  prepare 
information  for  beneficiaries  addressing  this  issue  and  circulate  it widely. 
1997  BALANCED  BUDGET  ACT 
The  1997  Balanced  Budget  Act  includes  a provision  which  addresses  the  concern  that  some 
hospitals  are  shifting  costs  from  a prospective  payment  system  to  a cost-based  system,  thus 
maximizing  Medicare  reimbursement.  Section  4407  of  this  recently  enacted  law  redefines 
beneficiaries  with  certain  diagnoses  who  are  discharged  from  hospitals  to nursing  homes  and 
home  health  agencies  (as well  as other  prospective  payment  exempt  settings)  as  transfers. 
This  limits  payments  to hospitals  for  these  cases. 
This  recently  enacted  law  also  addresses  the  concern  that  hospitals  disclose  ownership 
information  and  that  Medicare  beneficiaries  are  informed  of  their  freedom  to  choose  the 
home  health  agency  or  nursing  home  to which  they  will  be  referred.  Section  4321  of  the 
1997  Balance  Budget  Act  requires  hospitals  referring  patients  to  home  health  agencies  (HHA) 
and  other  post-hospital  providers  to: 
0 	 not  specify  or  otherwise  limit  beneficiaries  in terms  of  which  post-hospital  service 
provider  they  receive  services  from; 
 	 provide  beneficiaries  with  information  on  HHAs  and  other  post-hospital  providers 
which  serve  the  area; 
 	 disclose  to the  beneficiary  any  financial  interest  which  the  hospital  may  have  in an 
HHA  or  other  post-hospital  provider  to which  they  are  referred;  and, 
 	 disclose  to HCFA  the  nature  of  any  financial  interest  which  the  hospital  has  in a home 
health  agency  or  other  post-hospital  service  provider,  as well  as related  referral  rate 
information. 
The  HCFA  is in the  process  of  implementing  both  of these  new  provisions. 
COMMENTS 
We  received  comments  on  the  draft  report  from  the  Health  Care  Financing  Administration, 
the  Assistant  Secretary  for  Planning  and  Evaluation  (ASPE)  and  the  Assistant  Secretary  for 
Management  and  Budget.  They  generally  concur  with  our  recommendations.  The  actual 
comments  received  are  in Appendix  E. 
The  HCFA  stated  it hopes  to use  experience  gained  in implementing  the  new  transfer  policy 
authorized  by  the  Balanced  Budget  Act  to develop  techniques  that  can  be  applied  to  a broader 
set of  DRGs.  The  HCFA  also  expressed  concern  that  the  publication  referenced  in a draft 
18 
 report  recommendation  does  not  target  the  intended  audience.  To  accommodate  this  concern 
we  have  modified  our  recommendation. 
The  ASPE  provided  suggestions  for  changes  in wording  and  clarifications  of  the  text  which 
we  have  for  the  most  part  incorporated  into  the  final  report.  They  suggest  that  the  report 
provide  additional  detail  to the  discussion  about  Federal  requirements  for  discharge  planning 
and  the  referral  processes  used  by  hospitals  when  discharging  patients  to nursing  homes  and 
home  health  agencies.  Specifically,  the  ASPE  recommended  including  a discussion  of the 
criteria  used  by  hospitals  in selecting  the  post-acute  provider  type  to  which  beneficiaries  were 
referred.  In  an effort  to better  understand  what  factors  are  considered  in making  these  post-
hospital  placement  decisions,  we  asked  discharge  planners  When  you  determine  that 
Medicare  patients  need  post-hospital  services,  how  do  you  decide  whether  they  need  home 
health  agency  services  or they  need  to go  to  a nursing  home?  Most  respondents  indicated 
that  the  following  criteria  were  among  the  factors  used  to  make  this  determination:  the 
patientss  medical  needs,  the  degree  of  support  available  to  the  patient  in their  home,  the 
preference  of  the  patient  and  family,  and  the  patients  ability  to  function  safely  at home.  No 
one  criterium  was  cited  as being  more  important  than  the  others. 
19 
 APPENDIX  A 
PROPOSED  DISCHARGE  PLANNING  CHECKLIST 
Of the  121 discharge  planners  that  report  having  checklists,  53  submitted  them  for  our 
review. 
The  documents  submitted  varied  greatly  in length  and  content.  We  identified  a number  of 
check  lists  which  had  a relatively  simple,  clear  and  user-friendly  format  and  analyzed  them. 
They  also  had  a relatively  comprehensive  set  of  items.  Our  working  definition  of 
comprehensive  was  that  the  checklist  included  at least  some  items  which  fell  into  each  of  the 
following  three  types:  pre-admission  factors;  pre-discharge  factors;  and  patient  and  family 
involvement  in discharge  planning. 
On  the  basis  of  our  analysis  of  the  documents  and  discharge  related  discussions  with  patients 
and  families  we  developed  the  sample  checklist  below: 
Hospital Discharge  Planning  Checklist 
(A Proposed  Model) 
Patient  ID  Admission  Date 
Admitting  Dx  Planned  Rx 
I.  PRE-ADMISSION  STATUS 
1. Living  arrangements 
7.  Special  Circumstances 
2.  Physical  (ADL)  function 
3.  Mental  function 
4.  Social  supports 
5.  DME  used 
6.  Services  received 
(DESCRIBE  EACH  BELOW): 
1 
 II.  PRE-DISCHARGE  FACTORS 

1. Understanding  of  medical  condition  by  patient 

2.  Understanding  of  medical  condition  by  family/SO 

3.  Physical  (ADL)  function 

4.  Mental  function 

5.  Financial  resources 

6.  Social  supports  available  after  discharge 

7.  Special  circumstances 

(DESCRIBE  EACH  BELOW): 
III.  DISCHARGE  PLAN 

1. Services  needed  after  discharge 

2.  Type  of  Placement  preferred  by  patient 

3.  Type  of  Placement  preferred  by  family/SO 

4.  Type  of  Placement  recommended  by  hospital 

5.  Type  of  Placement  agreed  to by  patient/family 

6.  Specific  agency/home  recommended  by  hospital 

7.  Specific  agency/home  agreed  to by  patient/family 

8.  Pre-discharge  counseling  recommended 

9.  Special  circumstances 

(DESCRIBE  EACH  BELOW): 
IV.  SUMMARY 

1. Nature  and  outcome  of patient  and  family  involvement  in discharge  planning  process: 

2.  Anticipated  problems  in  implementing  post  discharge  plans: 

3.  Further  hospital  action  contemplated: 

A-2 
 APPENDIX  B 
ANALYSIS  OF  BENEFICIARY  UTILIZATION  DATA 
Two  separate  files  were  created  (one  for  nursing  homes  and  one  for  HHAs)  since  it was 
hypothesized  that  these  two  types  of  discharges  might  be  different.  The  analysis  involved 
comparisons  of the  following  data:  (1) beneficiaries  who  went  to  a HHA  (or  nursing  home) 
owned  by  their  discharging  hospital,  (2) beneficiaries  who  went  to  a HHA  (or  nursing 
home)  not  owned  by  their  discharging  hospital  even  though  their  discharging  hospital 
did  own  a HHA  (or  nursing  home),  and  (3) beneficiaries  who  where  discharged  from  a 
hospital  which  did  not  own  a HHA  (or  nursing  home)  and  went  to  an HHA  (or  nursing 
home)  which  was  independent  of  their  hospital.  Categories  2 and  3 were  combined  for  this 
analysis. 
The  analysis  was  a series  of  t-tests  or  chi-square  tests  depending  on  whether  the  variable  was 
continuous  or  categorical.  A separate  analysis  was  performed  for  the  HHA  and  nursing 
home  files.  The  continuous  variables  analyzed  included  the  following: 
1)  the  number  of  days  of the  original  hospitalization; 
the  number  of  HHA  or  nursing  home  covered  days;  and, 
2) 
The  categorical  variables  analyzed  were: 
1)  the  DRG  of  the  original  hospitalization  (coded  for  the  top  35%  of  the  DRGs); 
the  primary  diagnosis  for  the  HHA  (or  nursing  home)  service  (coded  for  the  top  35% 
2) 	
of  diagnoses);  and, 
3) 	 the  number  of hospital  readmissions  during  a six month  period  after  the  original 
hospital  discharge. 
Continuous  Variables-nursing  home  file 
Of the  continuous  variables  analyzed  by  the  two  categories  of  ownership  described  above 
within  the  nursing  home  file,  both  the  DAYS  variable  and  the  HOSPCOVD  variable  showed 
a significant  difference  by  type  of  ownership  as a result  of  the  weighted  analysis.  The 
DAYS  variable  refers  to the  number  of  nursing  home  covered  days  and  the  HOSPCOVD 
variable  refers  to the  number  of  days  of  the  original  hospitalization.  The  difference  appeared 
in each  of  the  two  strata,  ORT  vs.  non-ORT  States,  individually  and  when  the  strata  were 
combined.  The  table  below  shows  the  difference  combined. 
B-l  Comparison  of  Number  of  nursing  home  covered  days-Overall  Sample 
Type  of  Ownership  Average  Days  Standard  Error  of  Mean 
1  37.41  3.32 
2  29.54  2.17 
*t = 1.98- significant  at the  95 % confidence  level 
Comparison  of  Number  of  Days  of  Original  Hospitalization 
Type  of  Ownership  Average  Days  Standard  Error  of Mean 
1  6.83  .55 
2  8.89  .45 
*t =  -2.89- significant  at the  99 % confidence  level 
Continuous  Variables-HHA  File 
Of the  continuous  variables  analyzed  by  the  two  categories  of  ownership  described  above 
within  the  HHA  file,  the  only  one  which  showed  up  significant  as a result  of  the  t-test  was 
the  number  of  HHA  covered  days.  It  showed  up  higher  for  the  cases  where  the  beneficiary 
was  discharged  to  a home  health  agency  owned  by  the  beneficiarys  discharging  hospital. 
The  difference  appeared  in each  of the  two  strata,  ORT  vs.  non-ORT  States,  individually  and 
when  the  strata  were  combined.  The  table  below  shows  the  difference  combined. 
Comparison  of Number  of HHA  covered  days- Overall Sample 
Type  of  Ownership  Average  Days  Standard  Error  of  Mean 

hospital-owned  49.33  3.23 

independent  37.25  2.13 

*t =3.12  - significant  at the  99%  confidence  level 
Categorical  Variables-HHA  and  nursing  home  File 
Of the  three  categorical  variables  analyzed  within  the  HHA  and  nursing  home  file,  no 

relationships  were  significant  when  the  chi-square  test  was  performed  by  the  two  types  of 

ownership  for  the  overall  sample.  There  was  a problem  with  the  analysis  of  the  two 

variables  dealing  with  DRG  and  diagnosis  code.  Due  to the  many  codes  that  exist  for  DRGs, 

categories  of  the  DRGs  and  diagnoses  were  very  small  when  the  sample  was  analyzed.  Since 

the  sample  was  not  designed  for  the  specific  purpose  of  comparing  DRGs  or  diagnoses,  this 

B-2  made  a significant  difference  less  likely  to  appear.  The  sample  size  for  the  number  of 
readmissions  was  not  a problem,  however,  the  value  of  the  chi-square  statistic  (1.359)  was 
not  significant. 
CONFIDENCE  INTERVALS  FOR  PERCENTAGE  OF  PATIENTS  DISCHARGED  TO 
A HOME  HEALTH  AGENCY  OR  NURSING  HOME  OWNED  BY  THEIR 
DISCHARGING  HOSPITAL 
The  computation  of  confidence  intervals  for  the  percentage  of  nursing  home  or home  health 
agency  patients  who  were  discharged  from  a hospital  which  owned  a nursing  home  or  a 
home  health  agency  is as follows: 
Nursing  Home 
Forty  percent  (rounded  from  39.8  percent)  of patients  were  referred  to  the  nursing  home 
owned  by  the  discharging  hospital  when  the  hospital  owned  a nursing  home.  The  95 percent 
confidence  interval  for  the  estimate  is: 
40%  +I- 8.9% 
Home  Health Agency 
Sixty-two  percent  (rounded  from  61.6  percent)  of patients  were  referred  to  the  home  health 
agency  owned  by  the  discharging  hospital  when  the  hospital  owned  a home  health  agency. 
The  95 percent  confidence  interval  for  the  estimate  is: 
62%  +I- 8.33% 
B-3 
 APPENDIX  C 
CHI-SQUARE  VALUES 
We  computed  Chi-square  values  for  survey  response  differences  based  on  whether  or  not  the 
hospital  owned  a home  health  agency  or  nursing  home.  These  values  were  computed  for  a 
number  of  key  questions  for  which  such  differences  are  reported  in our  findings.  Differences 
reported  in the  text  of  the  report  are  significant  at the  90%  confidence  level  unless  otherwise 
noted. 
Table  C 
CHI-SQUARE  Values  for  Testing  Significance  of  Differences 
Based  on  Ownership  for  Key  Survey  Questions 
Survey  Question  D  Chi- P  Confidence 
F  Square  Value  Level  @ 
* 
Value  Which 
Difference  Is 
Significant 
Do  you  believe  the  hospital  ever  puts  pressure 
on  Medicare  patients  to choose  a particular  1  1.66  .20  80% 
home  health  agency? 
Were  you  given  written  procedures  or  verbal 
instructions  from  your  hospital  on  how  to  1  3.06  .08  92% 
determine  which  home  health  agency  to  refer 
Medicare  patients  to? 
Which  of  the  following  best  describes  how  the 
decision  was  made  about  which  home  care  1  2.09  .14  86% 
agency  you  would  get  care  from  after  leaving 
the  hospital? 
Which  of  the  following  best  describes  the 
amount  of  say  you  had  about  which  home  care 
agency  to use? 
How  satisfied  you  were  with  how  the  decision  4.08  .04  96% 
was  made  on  which  home  care  agency  you 
would  get  services  from? 
C-l  Which  of  the  following  best  describes  the 
amount  of  say  you  had  about  which  nursing 
home  to  go  to?  1  3.35  .07  93% 
How  satisfied  you  were  with  how  the  decision 
was  made  on  which  nursing  home  you  would  go 
to  after  leaving  the  hospital? 
Did  you  feel  that  you  were  discharged  at the 
right  time,  too  soon  or  later  than  necessary?  1  2.53  .ll  89% 
(HHA  patients) 
How  good  was  the  connection  between  the  care 
you  got  in the  hospital  and  the  care  you  got  at  1  1.20  .27  73% 
home? 
About  how  soon  after  you  were  admitted  to the 
hospital  did  someone  from  the  hospital  first  talk  1  2.91  .09  91% 
to  you  or your  family  about  health  care  services 
you  might  need  after  you  left  the  hospital? 
Did  you  feel  that  you  were  discharged  at the 
right  time,  too  soon  or  later  than  necessary?  1  3.43  .06  94% 
(NH  patients) 
How  good  was  the  connection  between  the  care 
you  got  in the  hospital  and  the  care  you  got  in  1  3.77  .05  95% 
the  nursing  home? 
* Degrees  of  Freedom 
c-2  APPENDIX  D 
NON-RESPONDENT  ANALYSIS 
When  surveys  are  used  to  collect  data,  the  results  may  be biased  if non-respondents  differ 
from  respondents.  For  this  inspection,  a beneficiary  for  whom  a beneficiary  survey  was  not 
received  is a non-respondent.  Additionally,  a discharge  planner  for  whom  a discharge 
planner  survey  was  not  received  is a non-respondent.  To  test  for  the  presence  of  any  bias, 
we  first  obtained  information  from  HCFAs  1995  1 percent  Common  Working  File  for  all 
1000  beneficiaries  who  were  sent  a mail  questionnaire.  Information  was  also  obtained  on  the 
hospitals  from  which  sample  beneficiaries  were  discharged.  (These  were  the  hospitals  to 
which  discharge  planner  surveys  were  sent.) 
Beneficiarv  Non-ResDondent  Analvsis 
A total  of  651  beneficiary  surveys  were  returned,  for  a response  rate  of  65 percent.  To  test 
for  the  presence  of  any  non-response  bias,  we  analyzed  the  variables  which  might  influence 
whether  an  individual  would  respond  to the  survey  or  that  might  affect  his  or  her  responses. 
For  the  1000  beneficiaries  in our  survey  we  looked  at:  whether  the  beneficiary  went  to  a 
home  health  agency  owned  by  their  discharging  hospital;  whether  the  beneficiary  went  to  a 
nursing  home  owned  by  their  discharging  hospital;  sex;  and,  whether  the  beneficiary  resided 
in a ORT  or  non-ORT  State.  These  categorical  variables  were  tested  using  Chi-square  with 
the  appropriate  degrees  of  freedom. 
The  results  of  this  analysis  are  presented  in tables  D( l-4).  The  Chi-square  values  given  in 
the  tables  provide  a test  of the  difference  between  the  distribution  of the  respondents  and  that 
of the  non-respondents  for  the  variable  of  interest.  Also  provided  in the  tables  are  the 
response  rates  by  the  different  values  of the  variables.  The  differences  between  the  response 
rates  for  the  variables  tested  are  not  statistically  significant. 
D-l  Table  D (1 - 4) 
CHI-SQUARE  Values  for  Testing  Significance  of  Differences 
Between  Respondents  and  Non-Respondents  For 
(1) Hospital  Ownership  of  HHA  (2) Hospital  Ownership  of  Nursing  Home 
(3)  Sex  and  (4) ORT  or non-ORT  State 
(1) HOME  HEALTH  AGENCY  OWNERSHIP 
Respondents  Non- Total  Percent 
respondents 
Beneficiary  went  to the  100 (28%)  41  (28%)  141  71% 
HHA  owned  by  the 
discharging  hospital 
Beneficiary  did  not  go to  262  (72%)  105  (72%)  367  72% 
the  HHA  owned  by  the 
discharging  hospital 
II
Total  I  362  I  146  508  71% 
CHI-SQ  = .Oll 

Degrees  of  Freedom  =  1 

(2) NURSING  HOME  OWNERSHIP 
Respondents  Non- Total  Percent 
respondents 
Beneficiary  went  to  the  13 (6%)  21  (11%)  34  38% 
nursing  home  owned  by  the 
discharging  hospital 
Beneficiary  did  not  go to  187 (94%)  179  (89%)  366  51% 
the  nursing  home  owned 
by  the  discharging  hospital 
Total  200  200  400  50% 

CHI-SQ=2.057 

Degrees  of  Freedom  =  1 

D-2 
 (3) SEX 

Respondents  Non-respondents  Total  Percent 
Male  221  (34%)  105 (30%)  326 
 68% 
Female  430  (66%)  244  (70%)  674 
 64% 
Total  651  349  1000 
 65% 
CHI-SQ  = 1.542 

Degrees  of  Freedom  =  1 

(4) ORT  or non-ORT  STATE 
Respondents  Non-respondents  Total  Percent 
ORT  State  497  (76%) 
 253  (72%)  750 
 66% 
Non-ORT  State  154 (24%) 
 96  (28%)  250 
 62% 
Total  651 
 349  1000 
 65% 
CHI-SQ  = 1.797 

Degrees  of  Freedom  =  1 

D-3 
 Dischawe  Planner  Non-Respondent  Analvsis 
A total  of  625  discharge  planner  surveys  were  returned,  for  a response  rate  of  63 percent. 

Because  there  was  no  data  for  74  of the  1000  hospital  records  obtained,  this  analysis  is based 

on  926  records  rather  than  the  full  sample  size. 

To  test  for  the  presence  of  any  non-response  bias,  we  analyzed  the  variables  that  might 

influence  whether  a hospital  discharge  planner  would  respond  to  the  survey  or that  might 

affect  his  or  her  responses.  For  the  926  discharge  planners  in our  sample,  we  looked  at: 

whether  or  not  their  hospital  owned  a home  health  agency;  whether  or  not  their  hospital 

owned  a nursing  home;  and,  whether  their  hospital  was  in an  ORT  or  non-ORT  State.  These 

categorical  variables  were  tested  using  Chi-square  with  the  appropriate  degrees  of  freedom. 

Tables  D-5  and  D-6  show  no  statistically  significant  differences  between  respondents  and 

non-respondents  for  the  variables  tested. 

Table  D-7  shows  a statistically  significant  difference  between  respondents  and  non-

respondents  with  respect  to  whether  or  not  the  discharge  planners  hospital  was  in an ORT  or 

non-ORT  State.  In  order  to test  whether  this  difference  introduced  any  bias,  we  analyzed 

answers  to  a couple  of  key  survey  questions  given  by  discharge  planners  from  ORT  and  non-

ORT  States.  The  two  questions  we  looked  at were:  whether  any  home  health  agencies  ever 

help  make  decisions  about  whether  patients  are  in need  of home  health  services  and  what  the 

main  reason  was  to  send  patients  to  the  home  health  agency  which  the  hospital  owns.  In 

both  instances,  the  distribution  of  answers  provided  by  ORT  and  non-ORT  respondents  were 

within  5 percentage  points  of  each  other.  This  difference  was  not  statistically  significant. 

Given  the  results  of  this  analysis,  we  believe  that  the  inspection  findings  fairly  represent  the 

experience  and  opinions  of beneficiaries  and  discharge  planners  to  whom  the  questionnaires 

were  sent.  We  therefore  believe  that  our  survey  results  can  be  generalized  to  the  universe  of 

Medicare  beneficiaries  who  were  discharged  to  a home  health  agency  or  nursing  home  during 

the  last  four  months  of  1995,  as well  as the  discharge  planners  who  assisted  them. 

D-4 
 Tables  D(57) 
CHI-SQUARE  Values  for  Testing  Significance  of  Differences 
Between  Respondents  and  Non-Respondents  For 
(5) Hospital  Ownership  of  HHA  (6) Hospital  Ownership  of  Nursing  Home  and 
(7) ORT  or non-ORT  State 
(5) HOSPITAL  OWNERSHIP  OF  HOME  HEALTH  AGENCY 
RReessppoonnddeennttss   NNoonn--  TToottaall   RReessppoonnssee  
rreessppoonnddeennttss   RRaattee  
HHoossppiittaall   OOwwnnss   229988   ((4488%%))   113300  ((4433%%))   442288   7700%%  
HHHHAA  
HHoossppiittaall   DDooeess   NNoott   332277   ((5522%%))   117711  ((5577%%))   498  6666%%  
OOwwnn   HHHHAA  
TToottaall   I  662255   I  330011   1  992266   1  6677%%  
CCHHII--SSQQ   ==  11..664488  
DDeeggrreeeess   ooff   FFrreeeeddoomm   ==   11  
(6) HOSPITAL  OWNERSHIP  OF  NURSING  HOME 
Respondents  Non- Total  Response 
respondents  Rate 
Hospital  Owns  NH  252  (40%)  122 (40%)  374  67% 
Hospital  Does  Not  373  (60%)  179 (59%)  552  68% 
Own  NH 
Total  625  301  926  67% 
CHI-SQ=0.004 

Degrees  of  Freedom  =  1 

D-5 
 (7) ORT  OR  non-ORT  STATE 
Respondents  Non- Total  Response 
respondents  Rate 
ORT  State  446  (71%)  247  (82%)  693  64% 
non-ORT  State  179  (29%)  54  (18%)  233  77% 

Total  625  301  926  67% 

CHI-SQ=  12.352 
Degrees  of  Freedom  =  1 

D-6 
 APPENDIX  E 
COMMENTS ON THE DRAFI REPORT 
In this  appendix,  we present  in full the  comments  from  the  Health  Care -Financing 
Administration,  the  Assistant  Secretary  for  Planning  and  Evaluation  and  Assistant 
Secretary  for  Management  and  Budget. 
E-l  DEPARTMENT  OF HEALTH  & HUMAN  SERVICES  Health  Care  Financing  Administration 
The  Administrator 
Washington,  D.C.  20201 
NOV I7 1997 
EIG 
Eoa 
DATE: 
DIG-AS 
DIG-EC 
DIG-H 
TO:  June Gibbs Brown  DIG-G1 
DIG-MP 
Inspector  General  AIG-LC 
OGUIG 
ExccseC 
FROM:  Nancy-Arm  Min DeParle  DateSent 
VW 
Administrator 
SUBJECT: 	 Office of Inspector General (OIG) Draft Report: Medicare Hospital 
Discharge Planning, (OEI-02-94-00320) 
We reviewedthe  above-referenced  report that examines how and to what extent hospital 
ownership  of home health agencies (HHAs) or nursing homes impacts hospital discharge 
planning for Medicare  beneficiaries. 
A significant  reduction  in the average length of stay for acute care hospital patients 
created a greater need for post-hospital  services such as home health and nursing home 
care.  These reductions  are widely believed to be associated with advances in medical 
technology  as well as the implementation  of the Medicare prospective payment  system. 
As the average hospital  stay decreases, the role of the hospital discharge planning process 
becomes more critical. 
The report raises concerns of whether hospitals are lowering their costs for patients for 
whom they are receiving  a lump sum prospective payment from Medicare  and 
discharging those same patients to post-hospital  services for which they are being paid on 
a cost basis.  This cost shifting would result in increased Medicare reimbursement  for the 
hospital. 
The Health Care Financing Administration  (HCFA) concurs with OIG recommendations 
one through five.  We do not concur with recommendation  six.  Our detailed comments 
are as follows: 
OIG Recmon  #l. 
HCFA should develop statistical methods to target special review providers who may be 
maximking  their Medicare reimbursement  in this way.  The records of these providers 
should be reviewed  by the peer review organizations (PROS), as in the past, or through  2 

some other suitable mechanism.  Providers that are fou.nd.to be inappropriately 
discharging beneficiaries  to their own nursing homes should be subject to payment 
adjustments  and appropriate  fmes or penalties. 
HCFA  Respmsc 
We concur with the intent of the recommendation  that inappropriate  discharges  should be 
eliminated.  However, we do not believe these discharge patterns only occur in the 
context of hospitals  discharging to their own post-acute facilities.  Rather, the recent 
increases in system integration  and coordination  between hospitals  and post-acute 
facilities  have changed discharge patterns across a wide range of hospitals.  We are 
currently  evaluating projects to be undertaken by the PROS concerning hospital 
admissions  and discharges. 
We believe  a more positive  approach to these changes is the post-acute  transfer policy 
that was recently  enacted in the Balanced Budget Act of 1997 (BBA).  Beginning in fiscal 
year  1999, the Secretary will be allowed to implement a limited, post-acute  transfer 
policy.  Under this policy,  if a hospital transfers a patient under  1 of 10 diagnosis-related 
groups (DRGs) designated by the Secretary to a post-acute facility,  the case will be paid 
as a transfer,  not as a discharge.  The transfer payment is based on a per diem 
methodology,  capped at the level of the full DRG payment.  In fiscal year 2001, the 
Secretary has the option of expanding this policy to other DRGs.  We believe this 
incremental  approach will give us the time and experience to create a post-acute  transfer 
policy that addresses the concerns of this report.  We are currently working with the 
PROS to identify  pilot projects to address these issues. 
OIG Recmon  #2 
HCFA should ensure that hospitals  disclose ownership of HHAs and nursing homes in a 
systematic  way. 
Hospitals  should inform beneficiaries  who are possible candidates for these post-hospital 
services of the names of the HHAs and nursing homes they own. 
lbsgonse 
HCFA 
We concur.  This issue is addressed by section 4321(a) of BBA that HCFA will 
implement  by issuing regulations  and, as needed, instructions.  3 

OIG Rmation  #3 
Hospitals  should be required to disclose to HCFA the names of HHAs and nursing homes 
that they own. 
We concur.  Fiscal intermediaries  process cost reports for all entities owned by the 
hospital  so they do know ownership information.  This issue is addressed by 
section 4321(b) of BBA that HCFA will implement by issuing regulations  and, as needed, 
instructions. 
. 
DIG  Recommendation  #4 
HCFA should take additional measures to ensure that when beneficiaries  are being 
discharged from the hospital they are given a choice in selecting a HHA or nursing home 
from which to receive care. 
Hospitals  should be required to inform patients (or their families) that they are free to 
choose between home health agency providers  and nursing homes.  This information 
should be provided as early as possible. 
We concur.  This issue is addressed by section 4321(a) of BBA that HCFA will 
implement  by issuing regulations  and, as needed, instructions. 
.
GIG Recm 
Hospitals  should maintain a file of Medicare participating  HHAs and nursing homes in 
the area and provide beneficiaries  (or their families) with a list of alternatives  appropriate 
for the level of care they need. 
HCFA. 
We concur.  This issue is addressed by section 4321(a) of BBA that HCFA will 
implement by issuing regulations  and, as needed, instructions.  OIG Rd  #6 
The report findings  support the need for additional Medicare beneficiary  information 
related to post-hospital  services and choice.  Therefore,  a wide circulation  of the next 
released  HCFA publication  entitled Healthcare Choice--A Consumer Guide for Planning 
Ahead is recommended. 
A Resm 
While we recognize the need identified in this recommendation,  we do not concur at this 
time because there is no publication  that is soon to be released.  The draft publication 
referenced  in your recommendation  does not target the intended audience.  Also, the 
information  in the draft does not meet the needs described in the recommendation.  With 
the recent reorganization  within HCFA, we are currently undertaking,  through a contract, 
an extensive  examin ation of the way we distribute all Medicare informational  materials, 
and options for changing the way we provide printed and audiovisual materials.  HCFA 
recently  received the draft report that details the number and types of informational 
materials  produced  in its central and regional offices and by HCFAs partners.  A survey 
revealed  a large number of publications  by partners, many of which appear to be 
duplicative,  have inaccuracies,  and are without HCFA-wide coordination.  The survey 
demonstrates  the opportunity  for improved customer service through consolidation  of 
current infbrmation  dissemination  functions. 
The next publications  report will include a set of design options for accomplishing 
consolidation,  including  a centralized electronic publications  clearinghouse.  Any of the 
suggested designs is expected to incorporate principles of efficient dissemination,  be 
tailored  to individual  beneficiary  needs, eliminate duplication,  and use a consistent 
message.  The target date for the final report is December 22.  Once we have the survey 
results  as well as other needs assessment information, we will determine the need for the 
referenced  publication.  DEPARTMENT  OF HEALTH  & HUMAN  SERVICES  Office  of the Secretary 
Washington,  D.C.  20201 
TO: 
DIG-01 
Inspector  General 
FROM:  David  F. Garrison 
Principal  Deputy  Assistant  Secre 
for Planning  and Evaluation 
SUBJECT:  OIG Draft Report:  Medicare  Hospital  Discharge  Planning  -- Conditional 
Concurrence  o&7- 02-74~0320 
The  OIG proposes  to issue  a report  on hospital  discharge  planning  for Medicare  beneficiaries 
discharged  to nursing  homes  (NHs)  or home  health  agencies  (HHAs).  The  OIG was particularly 
interested  in understanding  the impact  of  hospital  ownership  on patterns  of care and discharge 
processes  for beneficiaries  discharged  to NHs  and HHAs.  I  concur  on the  condition  that  the 
report  be rewritten  to reflect  the enactment  of the Balanced  Budget  Act  of  1997,  and more 
completely  reflect  ProPacs  discussion  about  possible  explanations  for observed  differences  in 
hospital  and nursing  home  lengths  of stays  for persons  referred  to hospital-owned  facilities.  In 
addition,  I have  made  other  minor  and technical  comments  on the report,  including  areas  that  the 
OIG may  wqt  to consider  for fkther  study. 
OIG Recommendations  and the Balanced  Budget  Act.  Several  recommendations  proposed  by 
the  OIG were  recently  exkted  in the Balanced  Budget  Act  (BBA)  of 1997.  Specifically: 
. 	 The  OIG reco~encls,  due to concerns  about  cost  shifting  between  the hospital  and NH, 
that  HCFA  conduct  targeted  provider  reviews  by organizations  such  as the PROS and 
recommends  that hospitals  found  to inappropriately  discharge  beneficiaries  to their  own 
NHs  be subject  to payment  adjustments  and fines. 
Section  4407  of the BBA  limits  payment  to acute  care hospitals  for cases  defined  as 
transfer  cases,  i.e., beneficiaries  with  certain  diagnoses  who  are discharged  fkom acute 
care hospitals  to PPS-exempt  settings  (including  home  health  and  skilled  nursing 
facilities).  The law limits  payments  to hospitals  for these  cases. 
.  . 	 The  OIG recommends  that hospitals  inform  beneficiaries  of their  freedom  of choice  of 
providers,  maintain  a list of NHs  and HHAs  in the  area, and that hospital-ownership  of 
NHs  and HHAs  be disclosed  to HCFA  and beneficiaries  who  may  use these  services.  Page  2 - June  Gibbs  Brown 
Section  4321  of the  BBA  requires  that  hospitals  disclose  to the Secretary  the financial 
relationships  between  the hospital  and post-hospital  providers  to which  beneficiaries  are referred 
and the percentage  of patients  referred  to post-hospital  settings  in which  the hospital  has a 
financial  interest.  The  BBA  requires  the  Secretary  to disclose  this information  to the  public.  In 
addition,  the  la<-&so  prohibits  hospitals  from  limiting  the home  health  providers  that  may 
provide  post-hospital  services. 
I recommend  that  the report  and the  recommendations  be rewritten  to reflect  the  enactment  of 
these  provisions  in the BBA. 
Imnact  of Ownershin  on Hosnital  and Nursing  Home  Length  of Stav.  The  OIG reported  finding 
that  beneficiaries  referred  to hospital-owned  NHs  had  shorter  lengths  of hospital  stays  and  longer 
NH stays  compared  with  beneficiaries  referred  to NHs  not owned  by the hospital.  As the  OIG 
notes,  this  finding  is consistent  with  earlier  work  by ProPac.  However,  the  OIG states  that  this 
finding  may  indicate  cost  shifting  from  a prospective  payment  system  to a cost-based 
reimbursement  system.  While  I do not  disagree  that this  could  simply  be an effort  to maximize 
Medicare  reimbursement,  I also believe  that  this  could  reflect  efforts  by hospitals  and  hospital-
based  facilities  to more  effectively  coordinate  care across  settings  for certain  types  of 
beneficiaries.  I note  that ProPac  also  suggested  that the observed  impact  on hospital  and nursing 
home  lengths  of stays  could  be due  to coordination  and case mix.  I recommend  the  OIG report 
be more  balanced  when  attributing  causes  to differences  in length  of stay  and more  completely 
discuss  the ProPac  findings. 
Other  Issues 
The  OIG report  references  should  work  on the Uniform  Needs  Assessment  Instrument.  This 
discussion  should  be strengthened  to include  information  on the purpose  and potential  use of this 
.. 
instrument. 
The  report  should  indicate  how  the  sampled  nursing  homes  and home  health  agencies  were 
divided  into  hospital-owned  and not  hospital-owned  providers. 
The  report  should  clarify  the  source  of supporting  evidence  that beneficiaries  who  are discharged 
to hospital-owned  home  health  agencies  have  more  frequent  hospital  readmissions  (i.e.,  p.  14 -- 
first paragraph  under  the heading,  Hospitalownership results in home health use of longer 
-	 duration 3.  In addition,  I recommend  that  the  second  sentence  of this paragraph  clarify  that 
while  the OIG found  some  evidence  supporting  this  fmding,.this  evidence  was not  statistically 
significant. 
The  OIG recommends  wide  circulation  of a publication  entitled,  Health  care Choices  -- A 
Consumer  Guide  for Planning  Ahead.  I recommend  the report  provide  the reader  with  more 
information  about  this  guide.  Page  3 - June  Gibbs  Brown 
Next  Steps 
The  OIG report  includes  a discussion  about  Federal  requirements  for discharge  planning  and the 
referral  processes  used  by hospitals  when  discharging  patients  to nursing  homes  and home  health 
agencies.  The  deport  does  not discuss  the criteria  used  by hospitals  in selecting  the post-acute 
provider  type  to which  beneficiaries  were  referred.  Given  that there  is at least  some  overlap  in 
the types  of patients  served  by the various  post-acute  care providers,  I believe  it is important  to 
understand  what  factors  are considered  in making  post-hospital  placement  recommendations  and 
decisions.  If possible,  I recommend  the OIG include  a discussion  about  the criteria  used  by 
hospitals  in referring  patients  to home  health  agencies  or nursing  home  providers.  If the  OIG  did 
not  gather  this  information  as part  of this  study,  the OIG may  wish  to identify  this  as an area  in 
which  further  study  is needed. 
On a related  note,  the OIG points  out that there  is no single  model  of hospital  discharge  planning 
(e.g.,  definitions  of discharge  planning,  organizational  structures,  and staff qualifications  vary 
across  hospitals).  An additional  area that would  benefit  from  further  work  is the development  of 
a typology  of discharge  planning.  I recommend  that the  OIG consider  identifying  this  as area  in 
need  of development.  DEPARTMENT  OF HEALTH  & HUMAN  SERVICES  Office  of the  Secretary 
Washington,  D.C.  20201 
AUG 2 9 1997 
MEMORANDUM  TO: 	 June  Gibbs  Brown 
Inspector  General  1 
FROM  :  4. 	 John  J. Callaha 
Assistant  Secret 
SUBJECT  : 	 Concur  with  Comment  -- OIG  Draft  Report:  Medicare 
Hospital  Discharge  Planning  &/-62- ?r/- wL3 
The  Balanced  Budget  Act  of 1997  includes  a provision  that  will  change  hospital 
discharge  policy  in certain  situations.  Under  the  new policy,  certain  hospital  DRGs 
selected  by the  Secretary  will  be treated  as transfers  rather  than  discharges.  The 
change  addresses  to some  extent  the  problem  of hospitals  discharging  patients  quicker 
in order  to maximize  their  Medicare  reimbursement. 
As this  policy  change  will  likely  affect  discharge  planning  procedures  in some  hospitals, 
we recommend  that  OIG  include  a paragraph  in the  introduction  section  explaining  the 
new  law. 
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