Respiratory Care Services in Medicare: Executive Summary

Respiratory therapy is an important and growing component of Medicare Inpatient Hospital and Skilled Nursing Facility (SNF) care. Congress has directed the Health Care Financing Administration (HCFA) to develop and implement a Prospective Payment System (PPS) for Medicare SNFs effective July 1, 1998. The SNF PPS design has been based on data collected in the Nursing Home Case-Mix and Quality (NHCMQ) Demonstration.

The American Association for Respiratory Care (AARC) and others have met with HCFA staff over the last year concerning the design of the SNF PPS system. Based on those briefings, AARC has become concerned regarding the position of respiratory therapy in the SNF PPS system. Muse & Associates was commissioned by AARC to:

1. Examine and outline the HCFA methodology regarding respiratory therapy;
2. Determine the scope and extent of respiratory care services in Medicare inpatient settings using the most recently data;
3. Determine if there are significant numbers of Medicare beneficiaries who are intense users of respiratory services; and
4. Speculate on how these intense users might be dealt with in the SNF PPS system.

The results of the analysis are summarized as follows.

How many Medicare beneficiaries who are admitted to a SNF or Inpatient Hospital setting receive respiratory therapy services and at what cost?

HCFA data show that approximately 4.2 million (33 percent) of the 13 million Medicare beneficiaries who were in a SNF or Inpatient Hospital setting in 1996 received respiratory therapy services at a cost to Medicare of $3.2 billion.



How many Medicare beneficiaries who are admitted to a SNF received respiratory therapy services and at what cost?

HCFA data show that approximately 363 thousand (24 percent) of the 1.6 million Medicare beneficiaries who were in a SNF setting in 1996 received respiratory services at a cost to Medicare of $386 million.

How much and in what way have Medicare respiratory therapy services grown in recent years?

Medicare received 300,320 claims and $493 million in charges for respiratory therapy services from Medicare SNFs in 1994. By 1996, Medicare was receiving 580,940 claims and $1.1 billion in charges from Medicare SNFs for respiratory therapy services, a growth of 280,620 claims and $658 million in charges. In the same period, claims from Inpatient Hospitals for respiratory therapy services decreased by 531,860 and charges decreased by $417 million. These data clearly show that hospitals were shifting beneficiaries with respiratory care needs to the SNF setting during the 1994 to 1996 period. Industry data suggest that this tend has continued.

Do certain diagnoses account for the majority of respiratory therapy payments?

The top 100 diagnoses account for 98.6 percent of all respiratory care services. The top 10 account for approximately half of all respiratory payments and the top five diagnoses account for one-third of all payments.

Did the top diagnoses differ between SNF and Inpatient Hospital settings?

No significant differences were found between SNF and Inpatient Hospital diagnoses patterns.

Were there intense users of respiratory care services?

Yes. Intense users of respiratory therapy services, defined as those with paid claims of more than $1,000, comprised only 18 percent of all Medicare beneficiaries who received respiratory therapy services but accounted for 74 percent of all Medicare expenditures for respiratory care services.

Did the top diagnoses for intense utilizers differ between SNF and Inpatient Hospital settings?

No significant differences were found between SNF and Inpatient Hospital diagnoses patterns for the intense utilizers.

What were the differences in gender and age between Medicare beneficiaries with the top 5 diagnosis who did and did not receive respiratory therapy treatment in the SNF setting?

The data show that slightly more than half of those who used respiratory therapy services in SNFs were female. However, females consist of approximately two-thirds of all SNF patients. Conversely, 44.5 percent of respiratory therapy users are males, even though males comprise only 33 percent of the SNF population. Therefore, a higher proportion of males relative to their presence in the overall SNF population appear to use respiratory therapy services.

Users of respiratory services in SNFs also tend to be significantly younger. Only 19 percent of those who used respiratory services were over 85 years of age, whereas 33 percent of all SNF patients are over 85 years of age.

How do the length of stays and costs for the top diagnoses compare to national averages?

The average length of stay for SNF patients who receive respiratory therapy services was 22.6 days. This is significantly less than the 1996 average length of stay for all 1.6 million Medicare SNF patients of 26.2 days. Costs per day just for respiratory care services for the top ten diagnosis ranged from $39 to $85, with the average of all diagnosis being $47. More importantly, the top 5 diagnoses, which ranged in cost from $58 to $85 per day for respiratory care only, were all diseases of the lung.