Elderly/Long-term Care

The Medicare short stay transfer policy reduced hospital incentives to discharge orthopedic surgery patients early

Shorter hospital stays for orthopedic surgery patients was one result of the Medicare Prospective Payment System, which was implemented in 1983 to reduce health care costs. However, this led to more use of post acute care (PAC) by these patients, which was not cost-saving. Thus, Congress implemented the Short Stay Transfer Policy (SSTP) in 1998, which exacted penalties for early transfer to PAC for certain conditions. The SSTP effectively changed hospital discharge practice patterns for Medicare fee-for-service patients hospitalized for either elective joint replacement surgery (JR) or surgery for hip fracture (FX) from 1996 through 2000, according to a new study.

Following SSTP, hospitals immediately increased length of stay (LOS) for JR and FX, which then stabilized. Use of early discharge to PAC underwent a small step reduction followed by stabilization, explains John D. Fitzgerald, M.D., Ph.D., of the University of California, Los Angeles School of Medicine. For example, prior to implementation of the SSTP, LOS had been falling by 0.37 and 0.30 days per year for JR and FX patients, respectively. After implementation of the SSTP, there was an immediate increase in LOS by 0.20 and 0.17 days, respectively. Thereafter, the length of hospital stays remained flat.

The proportion of patients discharged early to PAC had been rising by 4.4 and 2.6 percent per year for JR and FX patients respectively, to a peak of 28.8 percent and 20.4 percent early PAC use in September 1998. Immediately after implementation of the SSTP, there was a 4.3 and 3.0 percent drop in use of early PAC. Thereafter, use of early PAC increased at a much slower rate (for JR) or remained flat (for FX). There was also significant regional variation in the magnitude of response to the SSTP. The study was supported in part by the Agency for Healthcare Research and Quality (HS13168).

See "Impact of the Medicare short stay transfer policy on patients undergoing major orthopedic surgery," by Dr. Fitzgerald, W. John Boscardin, Ph.D., Bevra H. Hahn, M.D., and Susan L. Ettner, Ph.D., in the February 2007 HSR: Health Services Research 41(1), pp. 25-44.

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