Health care utilization by old-old long-term care facility residents: How do medicare fee-for-service and capitation rates compare?

OBJECTIVE: To describe the healthcare utilization of a long-term care popul ation receiving primary and specialty care in a closed system and to compar e Medicare fee-for-service (FFS) reimbursement with the amount that would h ave been paid under capitation for these services. SETTING: A life care community in California composed of two facilities, bo th having residential care and nursing facility (NF) beds. PARTICIPANTS: Residents (n = 700) living in the community between September 1995 and February 1996. METHODS: Data on Medicare Part A and Part B reimbursements were gathered fr om billing records for hospitalizations , based on diagnostic related group payments, primary and specialty care visits, various procedures, diagnosti c tests, and therapeutic services. These data were compared with what the f acility, in collaboration with the providers and an affiliated hospital, wo uld have received under Medicare capitated rates at that time. RESULTS: Annually, residents averaged 16.3 primary care visits, 7.7 special ist visits, and 3453 hospital days per thousand. Nursing facility residents received significantly more primary care-than did those in residential car e. Total Medicare Part A and B payments per resident per month averaged $55 8. The monthly capitation rate in effect at the time for this population wa s substantially higher at $1085, generating an annual "risk pool" of $9.1 m illion. Care provided in the two facilities varied greatly. Hospitalization rates, clinic-based primary Fare and Specialist visits, and therapy sessions were greater in facility one. Overall expenditures were lower for residents at f acility two, where the majority of care was provided by trained geriatricia ns in collaboration with physician extenders and without sophisticated clin ical pathways and utilization controls. CONCLUSIONS: Our data support other studies that suggest that teams of geri atricians and physician extenders can reduce hospitalization rates and over all expenditures. Capitated rates for the frail, geriatric population warra nt careful study. These rates must balance fiscal responsibility with the n eed for adequate, risk-adjusted payments that create incentives for provide rs to produce high quality as well as cost-effective care.