DESCRIPTION (provided by the applicant): Each year, millions of Medicare beneficiaries are discharged from acute care hospitals into post-acute care settings, including inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs), and homes with services from home health agencies (HHAs). Expenditures for post-acute care (PAC) now consume 15% of Medicare's fee-for-service spending; they have grown steadily since 2000, despite efforts to contain PAC costs. The President's budget blueprint released on February 26th of this year envisions further changes to Medicare's PAC payment policies, including bundled payments for episodes of care that will include hospital stays, post-acute care, and readmissions. Yet, little is known about the value of PAC care, much less the effects of existing payment arrangements on total Medicare costs, the clinical outcomes of PAC users, and the structure of markets for PAC. The overarching goal of the proposed project is to enhance our understanding of the causes and effects of competition in PAC markets, with a particular focus on how changes in PAC payment policies have both influenced competition in these markets and modified the effects of competition on resource use and clinical outcomes. It will examine Medicare patients with three "tracer" conditions: stroke, hip fracture, and lower extremity joint replacement (LEJR). Specifically, our aims are to: 1. Examine the effects of competition on resource use and clinical outcomes for PAC episodes among patients discharged from an acute care hospital after a stroke, fracture, or LEJR, and how these effects are mitigated or enhanced by payment policies; 2. Assess how the effects of competition on resource use and clinical outcomes for PAC episodes differ depending on whether patients discharged from an acute care hospital with one of the three study conditions initially go to an IRF, a SNF, or home with or without home health care; 3. Describe the variation across geographic market areas and trends over time in PAC competition, and assess the factors that influence these variations and trends, especially changes in PAC payment policies. The proposed project will use linked Medicare administrative data for 1996-2008, as well as state-of-the-art analytic methods to achieve the project's objectives. Given the paucity of research in the fields of PAC and of health care market structure outside the hospital sector, the project will constitute a major and important step toward understanding and improving the value of PAC and care systems more generally.

Post-Acute Costs and Outcomes after Medicare's Reimbursement Changes Each year, millions of Medicare beneficiaries are discharged from acute care hospitals into post-acute care settings including inpatient rehabilitation facilities, skilled nursing facilities, and homes with services from home health agencies. We seek to understand how their care options and outcomes are influenced by the level of competition in their local post-acute care (PAC) markets and how those competitive forces interact with Medicare's PAC payment policies.